On 26 September of this year, the Cabinet of Ministers considered the informative report "On the Guidelines for State Tax Policy for 2024–2027", which provides for several changes to tax application from 2024.

Key changes

From 2024, gradually increase excise duty rates for alcoholic beverages, tobacco products, liquids used in electronic smoking devices, components for the preparation of liquids used in electronic smoking devices, tobacco substitute products, as well as certain petroleum products used in special economic zones (SEZ) and free ports.

Corporate Income Tax (CIT):

• stipulate that credit institutions and consumer credit providers make CIT payments at a rate of 20% of the profit earned in the pre-taxation year;

• stipulate that fuel and operating expenses incurred through the use of representative motor vehicles that have been registered in the company's possession or holding for more than 60 months do not constitute an object subject to CIT;

Value Added Tax (VAT):

• stipulate that a domestic taxpayer is entitled not to register in the State Revenue Service's VAT register if the total value of taxable goods supplied and services provided by them during the previous 12 months has not exceeded 50,000 euros;

• stipulate that specific membership fees for participating in sports competitions and fees for sports training provided by an association or foundation registered in the register of associations and foundations to persons engaged in sports shall not be subject to VAT, provided that the purpose of organising the sports competitions or training is not to generate additional income for said association or foundation;

• stipulate that fees for children's stay at summer camps, the organisation and operation of which are regulated in accordance with regulatory enactments in the field of education, shall not be subject to VAT;

• stipulate that the value of a bad debt for one recipient of goods or services, excluding VAT, is 1,000 euros; the supply of goods or provision of services to the corresponding recipient of goods or services must have been interrupted at least three months prior; the supplier of goods or provider of services has the right to report the VAT amount for the bad debt when submitting any (current) VAT return;

• amend the input tax deduction restriction regarding costs for fuel and operating expenses of representative motor vehicles, specifying the restriction regarding cases where the representative motor vehicle has been in the taxpayer's continuous possession or holding for at least 60 months.

Personal Income Tax (PIT):

• stipulate that tuition fees covered by an employer for an employee to obtain higher education at state-accredited Latvian educational institutions, or educational institutions in EU member states and European Economic Area countries, shall not be subject to PIT, provided that the conditions described in the informative report are met simultaneously;

• increase the PIT-exempt threshold for health or accident insurance premium amounts;

• allow a PIT payer to apply the non-taxable minimum and relief for a dependent person during the taxation year period in which they are also a micro-enterprise tax (MUN) payer;

• increase to 3,000 euros per year the PIT-exempt assistance provided from the funds of a trade union, public benefit organisation, or religious organisation or its institution;

• extend the eligibility of contributions made to Pan-European Personal Pension plans as justified expenses, aligning them with the tax regime applicable to contributions to private pension funds;

• establish as a permanent provision the PIT exemption for employer compensations related to remote work and increase the compensation amount to 40 euros.

Establish a single MUN rate of 25%.

Gambling Tax (GT):

• increase the GT rate for gambling machines—for each playing place of each gambling machine—up to 6,204 euros per calendar year;

• increase the GT rate for roulette and card and dice games (per table) up to 33,696 euros per calendar year;

• increase the GT rate for the object mentioned in Article 3, Part 5 of the Law "On Lotteries and Gambling Duty and Tax" (interactive gambling) to 12% of the revenue from organising such games.

The planned changes to tax laws will be included in the draft law prepared by the Ministry of Finance "On the State Budget for 2024 and the Budgetary Framework for 2024, 2025 and 2026".