Latvia’s Saeima has approved amendments to the Corporate Income Tax Law, effective 1 January 2026, introducing a 15% alternative tax rate for certain taxpayers, recognising port authorities as taxable entities, and clarifying exemptions for interest payments on specified financing and group company loans.
Latvia has published Amendments to the Corporate Income Tax Law on 18 December 2025, which were approved on 3 December 2025, introducing new provisions affecting port authorities, taxpayers composed only of natural persons, and interest payments on certain financing.
One key change is the introduction of additional exemptions from the thin capitalisation (interest restriction) rules.
Certain interest payments are exempt from restrictions, including those on securities traded within the EU/EEA, financing via licensed crowdfunding platforms, investment brokerage companies, credit institutions, securitisation companies, alternative investment funds, and loans between group companies at market rates. Special-purpose companies established under public-private partnerships are also exempt.
Other key updates:
- Port authorities are now explicitly recognised as taxpayers.
- Taxpayers whose members are only natural persons may opt to apply an alternative corporate tax rate of 15% on specific taxable objects. The taxable base in this case is adjusted using a coefficient of 0.85.
- Taxpayers applying the alternative tax rate must withhold personal income tax on dividends paid to shareholders.
The amendments took effect on 1 January 2026.
