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First steps in redistribution of tax burden

By Editor . 14.01.2009

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The changes in the Tax law that came into effect starting in the beginning of 2009 marks a turning point in the former tax policy.

The tax burden is gradually being redistributed from direct to indirect or consumption taxes. The rate of the value added tax has been changed from 18% to 21%, and could be raised even higher in the future, according to LETA. The government also approved the lowering of the personal income tax rate from the current 25% to 23%.

Additionally, according to the draft Latvia’s economic stabilization and development recovery program, the increase in value added tax and excise tax rates, as well as lowering of the personal income tax rate are only the first steps in the redistribution of the tax burden.