Financial Services, Latvia, Taxation

It was originally planned that the government could propose changes in the tax system already this year, however, the Finance Ministry's report indicates that work on the national tax policy guidelines will most probably continue until May 31, 2021.

The postponement is explained by the rapid spread of Covid-19 in Latvia and the world, as well as the restrictions imposed in Latvia. However, the Finance Ministry has prepared a separate report on assessment of the existing tax breaks, based on the State Audit Office's conclusions following an audit of tax breaks and incentives.

Currently there are 307 tax breaks and incentives in various sectors in Latvia. According to the Finance Ministry's estimates, in 2018 the total amount of the most significant tax breaks and incentives was EUR 2.254 bn, which is 37.7% of the total tax revenue and 7.63% of gross domestic product.

The Finance Ministry has developed a plan for defining the objectives and performance indicators of the existing tax breaks and incentives until the end of 2020.

According to the government declaration, the Finance Ministry had to develop medium-term national tax policy guidelines by May 31 this year.