The Latvian Tax System

The Latvian tax system is influenced by both Latvian legislation and the requirements set by the European Union. This can be described as average, with each taxpayer contributing an average of 30% of their income to the budget. Also, the diverse system of tax rates, tax incentives and incentives in Latvia allows every taxpayer to choose the optimal sector for their industry and asset management. The lowest effective tax rate in the European Union is in The Republic of Latvia. There are several commercial business areas with individual tax privileges - payments below 80% to 100%: for example, Liepaja and Rezekne have special economic zones and tax breaks can be granted by the Freeport of Riga and Ventspils.

The tax principles are governed by the law on taxes and duties. Taxes are administered by the State Revenue Service (SRS) and are classified as direct and indirect taxes. Indirect taxes are taxes that are not directly deducted from income and are levied on goods and services. Direct taxes, on the other hand, are taxes levied on all taxable income of individuals and companies.

You will can contact SRS only via EDS

The Saeima of the Republic of Latvia supported amendments to the Law on Taxes and Duties, which says that from 2021 taxpayers will be able to submit applications to the State Revenue Service (SRS) only in the Electronic Declaration System (EDS).

It is planned that any application containing a request, complaint, question or proposal within the competence of the SRS, as well as the annual declaration of income will have to be submitted only electronically.

In order to enable non-EDS users to acquire skills in working with the electronic system, as well as to enable the SRS to carry out educational activities and to inform the public about filling in and submitting the annual income declaration electronically, changes are planned from 1 January 2021.

In order to use EDS, a person will need to register as a user of an electronic declaration system. This can be done online by authentication with an online bank, electronic ID card or secure electronic signature. You can also become an EDS user by submitting a personal application to the SRS and verifying your identity. The SRS will register the applicant as an EDS user and will be assigned a username and password.

Amendments to the law are intended to speed up the flow of information and reduce the administrative burden for both taxpayers and tax administrations. Currently, the SRS provides taxpayers with more than 220 different types of services in the field of tax administration and customs. SRS data show that last year almost 95 thousand documents were received from natural and legal persons, but in the first seven months of this year, more than 50 thousand documents were received in paper form, according to the annotation of amendments.

Similarly, SRS statistics show that approximately 18 percent of annual income statements are submitted on paper each year, and their proper processing in the SRS in 2017 cost more than two million euros.

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