Taxes - Latvia

Taxes and duties in Latvia are governed by the Law On Taxes and Fees, specific taxing Acts and Cabinet Regulations issued pursuant to these Acts.

• The Law on Taxes and Fees [214 KB]

The tax and duty system consists of:

• national taxes ;
• national duties ;
• local authority duties.
• The tax system in Latvia and a brief description of taxation

The taxation system

Direct taxes

The Law On Personal Income Tax and the relevant Regulations of the Cabinet of Ministers govern the charge to personal income tax. Natural persons are subject to the tax on their income. The rate of income tax rate depends on the nature of the income: the rate on capital gains is 15%, the rate on other income from capital - 10%, and on other income - 25%.

• Personal income tax

           Corporate income tax is governed by the Law On Enterprise Income Tax and the related Regulations of the Cabinet of Ministers. The law applies to resident enterprises and to the permanent establishments of non-residents. The tax rate is 15%.

• Corporate income tax

The Law On Immovable Property Tax and the related Cabinet regulations govern the charge to immovable property tax. Land, buildings and constructions located in Latvia are subject to immovable property tax. The tax rate is 1.5% of the cadastral value of the property. Uncultivated agricultural land is subject to an additional rate of 1.5%, the rates on residential property are 0.2%, 0.4% and 0.6% depending on the cadastral value of the property.

• Immovable property tax

The Law On State Social Insurance governs the amount of the mandatory payments of state social security contributions. The combined rate is 35.09% of which 24.09% is the employer's rate and 11% is the employee's rate.

• Mandatory state social security contributions

Micro-enterprise tax is governed by the Law On Micro-Enterprise Tax. The micro-enterprise tax rate is 9%. Where the micro-enterprise tax payer has exceeded the statutory criteria of turnover, employee number or income, an additional rate is applied.

For a micro-enterprise to be able to pay the micro-enterprise tax, it must meet the following criteria:

• its members (if any) should be natural persons. in the case of a limited-liability company – its members and the members of the board should be natural persons;
• its annual turnover does not exceed LVL 70,000;
• the number of employees may not exceed five at any given time. Employees who are absent or made redundant are not counted as employees.
• Micro-enterprise tax

Indirect taxes

The Law On Value Added Tax and the related Cabinet regulations govern the charge to value added tax (VAT) in Latvia. Individuals required to pay VAT may be:

• natural persons;
• legal persons and state-financed institutions carrying on activities subject to VAT;
• a group of persons connected by agreement or a representative of a person;
• a VAT group;
• a partnership;
• a fiscal representative.

The standard rate is 22%. The reduced rate is 12%. A zero rate is also applied.

• Value added tax

The Law On Excise Duties and the related Regulations of the Cabinet of Ministers govern the application of excise duties.

Excise duty is paid by importers, authorised bonded warehouse keepers, approved consigners, approved consignees, temporarily registered consigners or traders placing an order, persons who import or receive excisable goods from another EU Member State which have been released for free movement in another EU Member State, and individuals importing non-alcoholic beverages, coffee or natural gas.

Tobacco products, alcoholic beverages, petroleum products, natural gas, coffee and non-alcoholic beverages are subject to excise duties.

Natural gas is not subject to excise duties from 1 September 2010 until 30 June 2011.

• Excise duty rates
• Excise duty

The Law On Car and Motorcycle Duty and the related Regulations of the Cabinet of Ministers govern the charge to car and motorcycle duty. The first registration in Latvia of cars and motorcycles is subject to the tax.

• Car and motorcycle duty

Customs duty is set pursuant to European Union regulations. The Latvian Customs Law and related Cabinet regulations govern separate customs provisions not regulated by the European Union.

• Customs duty

The Law On Vehicle Operation Tax and Company Car Tax governs the charge to vehicle operation tax (the tax rate depends on car engine capacity, gross vehicle weight and engine power) and to company car tax (the tax rate depends on engine capacity).

• The rates of vehicle operation tax and company car tax
• Vehicle operation tax
• Company car tax

The Law On Electrical Energy Tax governs the charge to electrical energy tax. Electrical energy tax is charged on electricity supplied to end-users as well as electricity supplied for own use. The rate of the tax is LVL 0.71 per megawatt-hour.

• Electrical energy tax

Other taxes

The Law On Natural Resources Tax and the related Regulations of the Cabinet of Ministers govern the charge to natural resources tax in Latvia.

In the Republic of Latvia natural resources tax is charged on the extraction of natural resources, landfill, air pollution and greenhouse-gas emissions produced by stationary technological equipment not included in the emission quotas, as well as on goods polluting water and environmentally harmful goods, e.g. lubricants and other goods and substances.

• The rates of natural resources tax
• Natural resources tax

The Law on Lotteries and Gambling Fee and Tax governs the charge to the tax on lotteries and games of chance. The tax on lotteries and games of chance is paid by enterprises in receipt of a special permit (licence) to organise and maintain lotteries and games of chance.

• The rates of the tax on lotteries and games of chance
• The rates of the tax on lotteries and games of chance

A special tax regime in Latvia applies to commercial activities carried on in free ports (Riga and Ventspils) and special economic zones (Liepaja and Rezekne). The application of the special tax regime is regulated by law.

• The Law On the Application of Taxes in Free Ports and Special Economic Zones
• The Free Port of Riga
• The Free Port of Ventspils
• The Liepaja Special Economic Zone
• The Rezekne Special Economic Zone