Direct and indirect taxes in Riga City, as well as in the whole territory of Latvia are determined by legislation.

Indirect taxes

Customs duties.These are usually collected and paid when importing (exporting) goods and included in the cost price of the goods. 

Excise tax. Itis imposed on alcoholic and non-alcoholic beverages, tobacco products, coffee, petrol, diesel fuel and other oil products. The excise tax is paid by:

• importers;
• warehouse keepers;
• approved traders, non-registered traders, distance sellers or representatives of excise duty payers;
• other payers in accordance with the Law on Excise Duties.

Value added tax (VAT). This is a consumption tax included in the price of a product or service and is paid by the final consumer of a product or service. The base tax rate is 22 %; however, the legislation also allows cases where 0 % and 12 % tax rates can be applied.

Direct taxes

Real estate property tax. The tax rate is 1.5 % of the cadastral value of the real estate.

Natural resources tax.It is imposed on:

• any natural resources obtained as a result of economic activity;
• environmental pollution – waste, emissions and polluting substances;
• environmentally hazardous goods and products;
• packaging of imported and domestically produced goods or products.

Taxes have to be paid by all legal persons, individuals or their unions, which if they are permitted to (where legislation provides a possibility of obtaining such permission), perform the following activities:

• extract natural resources in the territory (or on the continental shelf) of the Republic of Latvia, subject to taxation;
• emit pollution, subject to taxation, in the environment of the territory (or on the continental shelf) of the Republic of Latvia;
• import packaged environmentally hazardous goods or products for free circulation in the territory of the Republic of Latvia;
• sell domestically produced environmentally hazardous goods or products, packaged goods or products in the Republic of Latvia.

Mandatory state social insurance contributions. The payment calculated for an employee to whom a salary is paid, and from whom personal income tax has been withheld, and the earnings of a self-employed person. The mandatory contribution rate is 35.09 %, 24.09 % of which is paid by the employer and 11 % by the employee.

Personal income tax. This is imposed on the income gained by an individual consisting of:

• tax on salary calculated from the money earned by the employee and paid by the employer;
• fixed income tax on the revenue from operating activities;
• tax on the revenue from operating activities, if corporate income tax is not imposed on it;
• tax on other sources of income.

The basic tax rate is 25 %. The tax rate imposed on the revenue from business activities is 15 %.

Corporate income tax. The tax is imposed on the profit or loss declared in the company’s annual profit and loss statement as amended according to the Law on Corporate Income Tax.

The tax has to be paid by:

• domestic companies performing business, public and religious organizations, and institutions financed from the state or municipal budget gaining revenue from business activities (residents);
• foreign companies, enterprises, legal persons and other persons (non-residents);
• permanent representations of non-residents, for whom income tax rate is 15 %.

Private merchants have to pay the personal income tax of 25 %.

Lottery and gambling tax. It is paid by companies (enterprises) that, according to an order prescribed by law, have obtained special permission (a licence) for organizing and providing lotteries and gambling.

Electricity tax. It is paid by the persons supplying electrical power to end-users who have concluded contracts, or agreed in any other way upon the supply of electric power. The tax is imposed on the electric power supplied to the end-user, as well as on electric power supplied for self-consumption.

The tax rate for electric power is 0.71 LVL per megawatt-hour.

Source: www: liaa.gov.lv

This material has been prepared in cooperation with the City Development Department of the Riga City Council and www.investinriga.com