Budget, Financial Services, Latvia, Legislation, Taxation
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Friday, 29.03.2024, 15:25
Personal income tax payments from Riga and Ventspils to go directly to the State Treasury
At the moment, all personal income tax payments by Riga and Ventspils taxpayers go directly to the two municipalities' budgets, bypassing the State Treasury. The agreement with the Riga City Council was signed in December 1995 and with the Ventspils City Council in March 1996.
Today, the government approved the Finance Ministry's proposal to terminate these agreements and to order personal income tax payments by both cities' taxpayers to be paid into the State Treasury's personal income tax account. This will simplify the personal income tax payment procedure, reduce the administrative burden, and make the use of state and municipal resources more efficient. The transition to centralized personal income tax collection will optimize the tax administration process and reduce the number of erroneous payments, the Finance Ministry explains.
The government's decision was made regardless of several objections given in a letter from Ventspils City Council, namely, the Ventspils municipality points out that a local government that collects personal income tax is interested in stimulating and developing local businesses as they determine the municipality's budget, likewise, employers are interested in paying the tax into the local government's budget, knowing that this money will be spent entirely in local residents' interest.