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.
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