No major tax changes foreseen next year; plans to raise excise duty

The Ministry of Finance (FM) proposes to raise excise duty on tobacco and alcohol next year, as well as introduce a mandatory advance payment of corporate income tax to banks in the amount of 20% of the profit of the previous year. This is set out in a report on tax policy guidelines for the next three years, which will be presented to the government on Tuesday, September 26.

Finance Minister Arvils Ašeradens (New Unity) has emphasized that there will be no significant tax changes next year because the current situation in the economy does not allow it. It is not a good time to drive changes in value-added tax, labor taxes, personal income tax, or corporate income tax, the finance minister said.

Businesses have called for labor taxes to be reduced, but as Ašeradens has previously pointed out, it would be possible only by raising other taxes. Larger tax changes will be considered for 2025, this will be reflected in the tax guidelines planned to be prepared by the end of the year.

“At a time when citizens are in a very difficult situation, the European Central Bank is raising interest, the price of money is increasing and economic activity is diminishing, and the impact of inflation is still being felt in all areas, it would not be right to move taxes at this point. Once the situation stabilizes, we can discuss it, but it's certainly not next year,“ the finance minister said.

Aigars Rostovskis, President of the Latvian Chamber of Commerce and Industry (LTRK), also supports the approach not to rush tax changes.

“Clearly there are signals from Europe that the budget deficit cannot be increased, that is also the right thing to do and there must be discipline. Question where to take the money from? If I was asked, I would also suggest that raising taxes would not be a good thing. All the more so as other economies are also falling or stagnating in Europe, and our colleagues are signaling that export volumes are falling and that this is keeping the market heavier. Therefore, it is natural that still accumulating the tax burden on top would not be a work of mind,” the President of the LTRK said.

The working group on taxation, with representatives from the Green and Farmers Union and Progressives of the new coalition parties, will resume work soon. Previously, it ended with the fall of the government.

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