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International Internet Magazine. Baltic States news & analytics Wednesday, 08.12.2021, 15:06

Labor tax burden in Latvia higher than in Lithuania and Estonia

BC, Riga/Vilnius/Tallinn, 24.09.2020.Print version
Even though personal income tax rates across the Baltic countries are similar, the overall labor tax burden in Latvia is higher than in Lithuania and Estonia, the Free Trade Union Confederation of Latvia finance and tax expert Janis Hermanis said at the confederation's conference today, cites LETA.

A high labor tax burden affects exports and foreign investment, as well as means fewer opportunities for increasing employees' wages, and a larger shadow economy, said Hermanis.

He believes that currently the focus should be on increasing the competitiveness of labor taxes, as well as achieving that more employees pay taxes, including by introducing minimum state social insurance contributions regardless of what tax regime applies to the taxpayer.

MP Vjaceslavs Dombrovskis said that a number of Belarusian IT companies were inquiring about relocating to Latvia, and their primary concern was the labor tax burden. He, too, said that the government should consider easing the tax burden and making the tax system more competitive.

Saeima member Dace Reizniece-Ozola (Greens/Farmers) added that changing the system of microenterprise taxes at this time would impair Latvia's competitiveness as compared to, for instance, Estonia.

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