Budget, Financial Services, Latvia, Legislation, Taxation

International Internet Magazine. Baltic States news & analytics Friday, 18.04.2025, 13:58

Latvian ruling coalition reaches agreement on VAT and income tax reductions

Alla Petrova, BC, Riga, 11.05.2012.Print version
The ruling coalition agreed yesterday that the value added tax (VAT) rate would be reduced one percentage point on July 1 this year, from the current 22% to 21%, whereas personal income tax will be reduced five percentage points in the next three years, from the current 25% to 20%, Prime Minister Valdis Dombrovskis (Unity) told reporters after the ruling coalition's meeting yesterday.

The government will continue discussions on increasing the non-taxable minimum and tax deductions for families with dependents, writes LETA.

 

The Finance Ministry could hand in the bill on tax rate modifications already next week and the government could vote on it already on Tuesday, said Dombrovskis. The final decision will be up to Saeima.

 

As reported, the Finance Ministry proposes reducing the VAT rate already on July 1 this year, and the personal income tax rate – from January 1, 2013. The VAT rate could be reduced from 22 to 21% in mid-2012, on condition that businessmen will agree to reflect these changes in their prices.

 

Personal income tax rate could be reduced from 25 to 24% on January 1, 2013. The following few years could bring an even steeper reduction – by 2%, reducing the personal income tax rate to 20% within three years.

 

It is also planned that the monthly untaxed minimum will be raised from LVL 45 to LVL 60 already next year.





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