The general tax rate in Latvia continues to decline and is 35% at the moment, which is 11th lowest index in the European Union and European Free Trade Association and the lowest among Baltic States.

Lithuania’s total tax rate is 42.6%. That of Estonia is 49.3%, as concluded in the latest report by the World Bank, International Finance Corporation and PricewaterhouseCoopers on the global tax situation.

The 35% tax rate in Latvia is made up of 4.9% corporate tax, 27.2% of labour tax and 2.9% of other tax forms. The average time it takes to settle accounts in Latvia remains above the average in the region – 193 hours (176 in the region). However, the average amount of time has reduced significantly in comparison with last year, when it was 264 hours.

Latvia’s total number of required taxes to pay (seven) is one of the lowest, and puts Latvia in the TOP five of Europe along with Norway, Sweden, Estonia and Malta.

It is also concluded in the report that an enterprise of average size in EU/EFTA region pays an average of 41% of taxes in a total of 12.3 payments. The average amount of time required to pay for everything is 176 hours. A medium-sized company in the world, on the other hand, has a tax burden of 40.9%, which is followed by 25.9 payments and a total of 264 hours to settle accounts with the country.

«Latvia’s figures demonstrate the country’s competitiveness in comparison with other European countries and countries in the rest of the world – companies in Latvia are able to divert more resources to their economic activities for future development or paying of dividends. Looking from a state management perspective, it is currently highly important for related institutions to improve the efficiency of the tax administration process, maintain an attractive business environment and create a stable tax policy in the country. We are also happy that the time required to settle all accounts and perform payment has been successfully reduced in Latvia. One of the reasons is the improved Electronic Declaration System. Nevertheless, the system in general has also been improved by changes carried out to methodology as well,» – as explained by PwC manager Zlata Elksniņa-Zaščirinska.

According to Paying Taxes 2015 survey, Latvia is on the 24th place among 190 countries of the world. Estonia is on the 28th and Lithuania is on the 44th place. All three Baltic States demonstrate an overall improvement in comparison to last year.

The method of paying taxes in the world has become easier as well, as concluded in the report. The average time it takes for a company to pay its taxes has reduced by four hours in comparison to last year. The general amount an average company pays in taxes (calculated in accordance with Doing Business methodology) reaches 40.9% of commercial profits. An average company performs a total of 25.9 tax payments a year and spends 264 hours on payment processes.

«Latest results of Paying Taxes survey show that many countries continue to perform tax reforms. This means there are still plenty of room for improvements to further rationalize and simplify the tax-paying system,» – explains PwC Tax Team Lead Andrejs Pekmens.

The Paying Taxes 2015 survey compiles all necessary taxes and duties that are required to be paid in a specific year.

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