Budget, Financial Services, Latvia, Taxation

Compared to the respective period last year, the budget revenue collected by the State Revenue Service decreased by EUR 59.338 million, or 0.9%.

"Revenue declined during March-May due to the state of emergency restrictions in the country, and this declined was not compensated by increase of revenue in other months. Therefore the tax collection target was met by 92.7%, and tax collection was EUR 0.5 billion short of the target in the first eight months of 2020," representatives of the Revenue Service said.

Budget revenue generated from value added tax (VAT) has been dropping at the steepest rate. In the eight months of 2020, VAT revenue fell 5.9% from the same period a year ago to EUR 1.586 billion, which is 13.9% 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.

State social security contributions totaled EUR 2.254 billion in the first eight months of 2020, down EUR 1.9% from the same period a year ago and 5.3% short of the target.

Meanwhile, personal income tax provided EUR 1.14 billion in budget revenue, down 3.8% on year but 2.4% above the target.

Excise revenue fell 12.7% short of the eight-month target and dropped 12.7% from the first eight months of 2019 to EUR 690.246 million.

Corporate income tax brought in EUR 145.692 million, which is 8.1 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 eight months of this year was nevertheless 23.7% 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.