27-10-2022
The Tax Foundation Analytical Center has published the International Tax Competitiveness Index for 38 countries. The index shows in which states the tax policy has a positive effect on business and people's lives.
Estonia, Latvia and New Zealand topped the rankings in 2022. The top 10 also includes Switzerland, Turkey and Israel.
For the second year in a row, Latvia ranks second in terms of the competitiveness of the tax system among the member states of the Organization for Economic Co-operation and Development (OECD).
Among individual tax groups, Latvia ranked first in the business tax index, fourth in personal taxes and fifth in property tax.
In terms of international tax conditions, the country is in 9th position. And the competitiveness of the consumption tax ranks 26th among OECD countries.
International analysts have noted the following strengths and weaknesses of the Latvian tax system
Some strengths of the Latvian tax system:
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Latvia’s corporate income tax system only taxes distributed earnings, allowing companies to reinvest their profits tax-free.
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Corporations can deduct property taxes when calculating taxable income.
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Taxes on labor are relatively flat, allowing the government to raise revenue from taxes on workers with very few distortions.
Some weaknesses of the Latvian tax system:
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Latvia’s network of tax treaties includes 62 countries, a relatively low number.
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Latvia’s thin-capitalization rules are among the stricter ones in the OECD.
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The threshold at which the VAT applies is significantly higher than the average VAT threshold for OECD countries.
For the ninth year in a row, Estonia has been recognized as the OECD member state with the most competitive tax system.
New Zealand has the third most competitive tax system among OECD countries, followed by Switzerland, the Czech Republic, Luxembourg, Hungary, Lithuania, Turkey and Israel.
Germany is ranked 15th, Canada is 16th, the US is 22nd, the UK is 26th, Poland is 28th, and lastly, 38th, is France.
