Budget, Financial Services, Latvia, Taxation

Compared to the respective period last year, the budget revenue collected by the State Revenue Service decreased by EUR 67.951 million, or 1.2 percent. 

"The general budget income managed by the State Revenue Service was affected by the state of emergency which was introduced in the country to contain the spread of Covid-19, as well as the restrictions that remained in force after the state of emergency," representatives of the Revenue Service said. 

Budget revenue generated from value added tax (VAT) has been dropping at the steepest rate. In the seven months of 2020, VAT revenue fell 7.5 percent from the same period a year ago to EUR 1.347 billion, which is 14.8 percent short of the target. 

Due to the measures introduced to curb the spread of Covid-19 revenue from labor taxes have been falling as well. While in the first three months of 2020 labor tax revenue grew by EUR 70.33 million on year, in the seven months of 2020 labor tax revenue fell by EUR 68.61 million from the respective period in 2019. The biggest slump was recorded in transport and warehousing, as well as the hospitality sector.

State social security contributions totaled EUR 1.967 billion in the first seven months of 2020, down EUR 1.9 percent from the same period a year ago and 5.7 percent short of the target. 

Meanwhile, personal income tax provided EUR 989.533 million in budget revenue, down 3.1 percent on year but 2.9 percent above the target. 

Excise revenue fell 4 percent short of the seven-month target and dropped 13.6 percent from the first seven months of 2019 to EUR 587.59 million. 

Corporate income tax brought in EUR 129.774 million, which is 8.5 times more than a year ago. The Revenue Service attributed the steep increase to tax refunds made in 2019 and new tax payment rules. Corporate income tax collected in the seven months of this year was nevertheless 25.4 percent short of the target. 

This year, Latvia's tax revenue is projected at EUR 10.503 billion. The target for the first seven months of this year was EUR 6.009 billion.