Analytics, Banks, Business, Financial Services, Latvia, Taxation
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Friday, 26.04.2024, 21:27
Citadele Index: For the First Time Business Owners Have a Positive View on Taxes
Since September of last year,
Latvian business owners have rated the tax payment and administration process
with an index of 7, which is finally a positive rating compared with the
negative ratings of previous years.
Meanwhile, business owners’
evaluation of tax rates did not improve, with them still being rated
overwhelmingly negatively - with an index of -45.
Citadele Bank Economist Mārtiņš
Āboliņš: “I think that this positive evaluation of tax administration is
primarily a result of corporate income tax reform. The new payment process
stopped advance payments and increased business’ motivation to show their true
profit. In practice, as a result of the reform, around 400 mln Euro this year
has been returned to Latvian business owners. This figure was previously used
as advance payments into the state budget but can now be invested into the
development of the business. Meanwhile, taxes must now be paid from actual
profits received. These are undoubtedly changes which are beneficial to the
development of entrepreneurship. A certain role in the evaluation of tax
administration could also have been played by attempts to improve the
relationship between business owners and the State Revenue Service, such as the
introduction of a “consult first” principle, as well as increasing the use of
the VAT reverse charge.”
The Citadele Index survey
shows that a majority, 57% of business owners, evaluated the tax payment and
administration process as fairly good, and 1% rated it as very good. Meanwhile
27% of business owners believe that the tax payment and administration process
is fairly bad, and 10% believe it is very bad. 5% had no opinion on this issue.
For a long time, tax rates
have been among the lowest-rated aspects of the business environment. 54% of
business owners evaluated the rates as fairly bad, and 26% as very bad. Tax
rates are seen as fairly good by 16% of businesses, while 4% replied that it
was hard to say.
About Citadele Index
Citadele Index is a survey
which has been conducted by Citadele Bank in Latvia since 2004. It surveys 750
business owners and managers. The survey and data collection is conducted by
market and public opinion research company SKDS. Manufacturers, retailers,
construction managers and service providers from all regions of Latvia offer
their opinions as part of the survey. This survey was conducted in March 2019.
Citadele Bank has been researching business owners’ opinions on taxes since
2016.