Tax system in Latvia
The Ministry of Finance shall develop state tax and customs policy, as well as prepare recommendations for institutions responsible for tax and customs administration on implementation of tax and customs policy activities.
Taxes and fees system in Latvia consists of:
- state taxes, object and rate of which shall be set by the Saeima;
- state fees which shall be applicable according to Law "On Taxes and Fees" (LV) specific other laws and regulations of the Cabinet of Ministers;
- local government fees which shall be applicable according to Law "On Taxes and Fees" (LV) and binding regulations issued by the council of local government;
- directly applicable taxes and other obligatory payments set in the European Union regulatory enactments.
Enterprise Income Tax
Shall be paid by legal entities and non-resident permanent establishments for their income. Tax rate is 15%.
Personal Income Tax
Shall be paid by natural persons for their income. Tax rate is 23%.
State Social Insurance Mandatory Contributions
Shall be paid by insured persons and their employers.Total rate is 34,09% which varies for different categories of insured persons.
Tax rate is 9% from turnover. Tax replaces state social contributions both for employees and proprietors and business risk state fee as well as personal income tax or corporate income tax depending on legal form of taxpayer. Legal form of microenterprise could be Limited Liability Company or individual merchant or individual performing economic activity without registration as an individual merchant. To qualify for status of microenterprise taxpayer the following criteria shall be met: employee’s income does not exceed EUR 700 per month, turnover does not exceed EUR 100 000 per year, the number of employees may not exceed five.
Real Estate Tax
Shall be paid by real estate owners or legal possessors. General tax rate is 1,5% from cadastral value of property unit. Residential property is taxed at a rate 0,2%-0,4%-0,6% depending on value of the property.
Value Added Tax
Shall be paid by legal entities and natural persons. Standard tax rate is 21%, reduced tax rate – 12%. On 1 January 2013 new Value Added Tax Law has entered into force. Value Added Tax Law replaces the Law On Value Added Tax, which was into force from 1995 till 2012.
Shall be applied to oil products, natural gas, alcoholic drinks, beer, tobacco products, coffee and non-alcoholic drinks (except natural juices and mineral water).
Shall be paid by persons supplying electricity to the end-users and self-governing producers. Tax rate shall be set in lats per megawatt-hour.
Shall be paid by legal entities and natural persons who own, possess or hold a vehicle, which is registered or is going to be registered in Latvia, or whose owned, possessed or held vehicle is given transit number plates or person who has declared in Latvia and use car which has registered outside of Latvia.
Company Car Tax
Shall be paid by merchant, foreign merchant branch and farm which own or hold passenger vehicle or truck with the total weight up to 3000 kg and which have more than three seats (included driver seat) and which is used also for personal needs of employees and/or proprietaries.
Shall be paid by natural persons and legal entities when importing goods into the EU.
Shall be paid by legal entities and natural persons if extracting natural resources, distributing or importing environmentally unfriendly goods or which are allowed to perform such activities.
Lottery and Gambling Tax
Shall be paid by lottery and gambling providers.