Latvia boasts lowest corporate tax among Baltics

The total corporate tax burden among the three Baltic states is lowest in Latvia, says the latest report Paying Taxes 2015 released jointly by the World Bank and audit agency PricewaterhouseCoopers (PwC) last week.

In the report Latvia is listed as having the eleventh lowest corporate tax rate in the European Union and Free Trade Association region.

Of the 35% total, in Latvia 4.9% of the burden comes from corporate income tax, 27.2% is attributed to workforce taxes, with 2.9% remaining miscellaneous.

The number of different taxes assessed on doing business in Latvia – seven, is currently also among the lowest, placing Latvia in the top-five states with Norway, Sweden, Estonia and Malta.

“Latvia’s showing compared to Europe and the rest of the world testifies to the state’s competitiveness – companies here can divert more of their resources to develop economic activity or disburse dividend payments,” said PwC Latvia representative Zlata Elksniņa-Zaščirinska.

She urged Latvia’s tax authorities to take advantage of the positive ranking and improve the effectiveness of the tax collection process, remarking that the electronic declaration system has reduced the amount of time required to fulfil corporate tax formalities here.

Assessing the differences between Latvia and its Baltic neighbor states, PwC tax department director Ilze Rauza explained that the personal income tax in Latvia stands at 27.2% compared with 39% and 35.2% in Estonia and Lithuania, respectively. Also the corporate income tax in Latvia is lower at 4.9% compared with 8.4% and 6.1% in Estonia and Lithuania, respectively.

“This is very important and good news for Latvia’s entrepreneurs, as well as those still planning to go into business for themselves,” Rauza said.

On the world rankings, Latvia placed 24th among 190 world nations, ahead of Estonia (28th) and Lithuania (44th).

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Economy
Economy