Next year's budget in Latvia will have bank excess profits tax

The next year's budget package will include a commercial bank excess profits tax, but it is necessary to assess which model to choose – the Estonian or the Lithuanian one, Finance Minister Arvils Ašeradens (New Unity) said in an interview with Latvian Radio on August 7.

The Minister said that the Lithuanian scenario would be a special terminated levy. The amount of the tax in Lithuania, known in public as the “solidarity tax”, is 60% of net income which is above the average of four financial years by more than 50%.

The Estonian scenario would, on the other hand, apply the corporate tax fee to the financial sector annually. Currently in Latvia, the financial sector is exempt from corporate tax fees until dividends are paid.

Ašeradens indicated that the decision to choose which scenario would be taken by mid-September.

Speaking about possible changes in labor taxes, the Finance Minister stated that four scenarios were assessed, three of which include the transfer of labor tax burden to consumption tax. The fourth scenario foresees no changes in the current tax system. “Until inflation stabilizes, we cannot talk about raising taxes,” said Ašeradens.

At the same time, the Minister pointed out that he did not see the possibility of reducing the value-added tax (VAT) rate in any of the sectors.

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