Latvian Tax Changes Come Into Effect

by Ulrika Lomas, Tax-News.com, Brussels

05 January 2009

A number of tax amendments came into effect on January 1 in Latvia, including a 3% value-added tax increase, changes to excise tax law and a 2% increase in personal income tax.

The change to VAT law also includes an increase to Latvia’s lower VAT rate levied on medicines, medical goods and equipment, infant products, heating, energy sources, and public transport services within Latvia. The above products which are subject to concessions in Latvia will now be charged VAT at a rate of 10%, double the 2008 level of 5%.

Within the new changes, personal income tax is reduced from 25% to 23% costing the government LVL66m (EUR95.5m) in 2009. The non-taxable allowance has been set at LVL1,080 (EUR1,561) per annum, whilst dependants will be eligible for a tax allowance of LVL756 (EUR1,093).

Amendments were also made to the law surrounding excise tax on alcoholic beverages and oil products, which will come into effect on February 1, 2009. Excise tax on unleaded petrol will stand at LVL269 for 1,000 litres instead of the previous LVL228. Tax on diesel fuel and petroleum will be increased to LVL234 per 1,000 litres from LVL193. Excise tax on coffee and non-alcoholic beverages will both be doubled from LVL50 to LVL100 per 100kg and from LVL2 to LVL4 per 100 litres, respectively.

Recommended