The World Bank and Latvia’s Ministry of Finance have signed the Latvia Tax Policy and Equity Reimbursable Service Agreement (RAS) with the objective of reviewing the tax system in Latvia and finding ways to improve its efficiency, competitiveness and equity while increasing revenue mobilization.
Latvia is already working on new tax policy guidelines for 2017 to 2020 involving an evaluation of the current tax system leading to policy proposals to improve the efficiency and equity of the tax system. Latvia’s tax system is already seen as being competitive internationally but more changes may be needed to sustain the conditions for high economic growth. The changes are likely to include measures to combat the grey economy and reduce tax evasion. The fairness of the tax system could also be increased by reducing the tax burden for low income employees.
The World Bank will review the tax system in cooperation with the government and tax experts and the focus will be on identifying options to increase government revenue by reducing tax evasion and the grey economy; assessing the options for changing the system to improve income equality; and ensuring that the tax system remains competitive. The study will aim to produce proposals that can be included in the medium term strategy and the budget proposals for 2017. The analysis and the resulting policy recommendations will be published for public consultation during the period of preparing the report.
