Latvia upholds proposal for differentiated personal income tax
The Latvian government today upheld the legislative proposal for a differentiated personal income tax, starting with 2018. Under the draft amendments to the Law on Personal Income Tax approved by the Cabinet for the final reading in the parliament, the existing 23 percent tax will be replaced by differentiated tax rates at 20 per cent, 23 per cent and 31.4 per cent.
A 20 percent rate will apply to annual incomes up to EUR 20,000, a 23 per cent rate will apply to annual incomes from EUR 20,001 to EUR 55,000, and a 31.4 per cent rate to annual incomes of over EUR 55,000.
There will be a single 20 per cent tax on capital income, including capital gains, that would replace the existing 10 per cent tax on capital income and the 15 per cent tax on capital gains.
Personal income tax will be levied also on cash lottery prizes, with the exception of the Centenary Lottery, and gambling winnings worth more than EUR 3,000, but the lottery prizes in the form of goods and services will be exempt from the tax.
The minimum non-taxable income for pensioners will be raised to EUR 250 a month in 2018, to EUR 270 in 2019 and to EUR 300 in 2020 and beyond.