Latvia To Slash Corporate Tax Rate

by Ulrika Lomas, Tax-News.com, Brussels

14 September 2001

Latvia's Ministry of Finance yesterday submitted its draft 2002 budget to the Cabinet of Ministers, setting the consolidated budget deficit at 1.73% of GDP. The budget for 2002 forecasts 6% GDP growth and 3% inflation.

Minister of Finance Gundars Berzins says that the draft budget for 2002 is a balanced budget that was created after extensive debate. Budget priorities include accession to NATO and the European Union, and an increase in expenditure on education.

"The government's goal in working out the draft budget for the year 2002 is to ensure sustainable, stable and balanced development of the economy by prompting residents' welfare," said the minister.

Corporate income tax is to be reduced to 15% from the current 25%. The minister is convinced that this will boost economic development, and fiscal gains in the long term will be considerably higher than direct decrease in revenues over one year.

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