Taxation in Latvia

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue Non-tax revenue Tax law Tax bracket Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Double taxation Representation Unions Medical savings account Tax, tariff and trade
Economics Price effect Excess burden Tax incidence Laffer curve Optimal tax Theory Optimal capital income taxation
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Private tax collection Tax farming
Noncompliance Tax avoidance Tax evasion Tax resistance Tax haven Smuggling Black market Transfer mispricing Unreported employment Tax shelter
Distribution Tax rate Progressive Regressive Proportional
Types Direct Indirect Per unit Ad valorem In rem Capital gains Carbon Consumption Dividend Ecotax Excise Fuel Georgist Gift Gross receipts Income Inheritance (estate) Land value Payroll Pigovian Property Sales Sin Single Stamp Steering Turnover Value-added (VAT) Corporate profit Excess profits Windfall profits Negative (income) Flat Wealth
International Financial transaction tax Currency transaction tax Tobin tax Spahn tax Tax equalization Tax treaty Permanent establishment Transfer pricing European Union FTT
Trade Custom Duty Tariff Import Export Tariff war Free trade Free trade zone Trade agreement
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania Algeria Argentina Australia Azerbaijan Bangladesh Bhutan Bulgaria Canada China Colombia France Germany Greece Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Namibia Netherlands New Zealand Norway Pakistan Palestinian territories Peru Philippines Poland Russia Singapore South Africa Sweden Switzerland Tanzania United Kingdom United States Uruguay

In Latvia, taxes are levied by both federal and local governments. Tax revenue stood at 28.1% of the GDP in 2013.^[1] The most important revenue sources include income tax, social security, corporate tax and value added tax, which are all applied on the federal level. Income taxes are levied at a flat rate of 24% on all income.^[2] A long range of tax allowances is given including a standard allowance of €900 per year and €1980 per year for every dependent.^[3]

Social security contributions are levied on all employment income and are mandatory for most workers. The employee pays 11% of the wage, while the employer contributes 24.09%.^[4] There was no maximum ceiling for social security in year 2013 because of the economic crisis, but the ceiling was reinstated in 2014 at €46,600 of yearly income.^[5] The standard rate for VAT is 21%;^[6] for medications and heating expenses, a reduced rate of 12% applies.^[7] Some goods and services are also exempt from VAT, this include education, medical care, financial transactions and rent.

Excise taxes apply on different luxury goods and things harmful to the environment. Wine is subject to excise duty of €64.03 per 100 litres. Coffee is subject to excise at €142.29 per 100 kg.^[8]

Taxation in Latvia have gone through major reforms since leaving the soviet union in 1991 and making a transition from a central run economy to a market economy.^[9] The fiscal system in Latvia after leaving soviet in Latvia was similar other former communist states with high public spending (45-50% GDP) and a tax system that relied in tax base definitions characteristic of central planning.^[10] Since then a long range of reforms have been made, including introducing a VAT in 1992 and Social Security Contributions.^[11]

References

1. ↑ "Eurostat - tax revenue GDP". 
2. ↑ "Income Tax Latvia - Europe.eu". 
3. ↑ "KPMG - Income tax Latvia". 
4. ↑ "Social Security in Latvia 2013" (PDF). 
5. ↑ "Social Security In Latvia 2014 - KPMG" (PDF). 
6. ↑ "VATGlobal". 
7. ↑ "VAT rates in EU" (PDF). ec.europa.eu. 
8. ↑ "Excise in Latvia - Ministry of Finance". 
9. ↑ "Latvia's post soviet transition" (PDF). 
10. ↑ "European Transition Compendium". 
11. ↑ "Country Studies - Latvia".