Latvia Reduces Corporate Tax To 19%

by Ulrika Lomas, Tax-News.com, Brussels

23 November 2001

On Thursday the Latvian parliament (the Saeima) passed amendments to the corporate income tax law forming part of the 2002 national budget, decreasing the headline rate of tax from 25% to 22% for all enterprises.

In 2003, the rate will be lowered to 19%, and to 15% in 2004. This was the least radical of a series of tax-cutting alternatives which the government had prepared. Other alternatives included applying a 15% rate to small-sized companies next year, applying such a rate to both small and medium-sized companies, and reducing the rate by a further 5% in 2003.

The Saeima also passed amendments to the law "On Customs Duty (Tariffs)" as part of the budget process. The amendments stipulate that an advantageous regime is to be applied to trade with developing countries according to a European Union decision, which sets import duty at zero for import of goods from these countries.

The amendments harmonize the volume of tax-exempt goods that individuals are allowed to take into Latvia with the rules applying in neighbouring countries Lithuania and Estonia.

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