Analytics, Financial Services, Latvia, Legislation, Markets and Companies, Taxation

The minister said that changes in the taxation system will be discussed with entrepreneurs' organizations and experts, and that the proposals will be based on recommendations provided by World Bank (WB) experts.

Reizniece-Ozola said that one of the WB recommendations is to ensure progressive labor income taxation, so that those who receive higher wages paid more in taxes. The WB proposes to set personal income tax rates in the range from 19% to 29%, where the lowest threshold would be EUR 360 and the highest EUR 1,300.

The minister also said that business tax rebates would be revised and that the WB is recommending raising taxes on capital. The WB experts do not believe that value added tax (VAT) should be raised in Latvia.

Latvia has concluded an agreement with the World Bank whose experts are assessing the equity and efficiency of the Latvian tax system. The World Bank aims to to review the current tax system in Latvia through a lens of efficiency, competitiveness, revenue mobilization and equity. The World Bank's findings and recommendations will be used when preparing Latvia's tax policy guidelines for 2017-20 and drafting the 2017 national budget.