The tax revenue plan for three months was fulfilled by only 98.7%, which is €49.6 million less than planned, the Ministry of Finance reported.
It should be noted that the current data do not yet fully reflect the impact of recent geopolitical events, warns the Ministry of Finance, which oversees Latvian tax authorities. This means the situation may worsen.
Revival Before Rate Increase
According to data from the State Revenue Service (SRS), the refund of overpaid personal income tax (PIT) in the first quarter amounted to €146.3 million — this is less than in the same period of 2025, but higher than the planned level. As a result, PIT revenues amounted to 91.4% of the plan.
Corporate income tax (CIT) revenues in the first quarter decreased by €24.5 million, or 13.8%. This is related to taxpayer behavior at the end of 2024, when companies actively distributed profits in the form of dividends to individuals, as from 2025, an additional CIT rate of 3% applies to income over €200,000.
VAT to Support Falling Excise
Revenues from consumer taxes were higher than a year earlier. Income from value-added tax (VAT) of €981.2 million increased by €67.8 million, or 7.4%, achieving 100.8% of the plan. The largest contribution came from trade, and revenues also increased in energy and services.
Excise tax revenues increased by €26.9 million, or 9.4%, reaching €312.7 million over three months. The plan was fulfilled at 98%. The largest growth was observed in petroleum products, while revenues from alcohol and tobacco decreased. As of January 1, fuel and tobacco rates were increased, and as of March 1, alcohol rates were raised. In response to the conflict surrounding Iran and the Middle East, a temporary measure was introduced from April 1 to June 30, 2026 — a reduction in excise duty on diesel fuel and marked diesel fuel for agriculture. According to the Ministry of Finance, losses from the reduction in excise will be compensated by an increase in VAT revenues due to rising fuel prices.
Europe Will Help Us
Overall, consolidated budget revenues in the first quarter amounted to €4.8 billion, increasing by €731.9 million, or 18.1%.
The main growth was provided by external financial aid revenues — in February, funds were received from the European Commission under the EU funds for 2021–2027.
This allowed for a budget surplus of €6.5 million compared to a deficit of €521.2 million a year earlier.
What About Expenses?
Consolidated budget expenditures for three months amounted to €4.8 billion, increasing by €204.2 million, or 4.5%.
The largest growth in expenditures was observed in the defense sector — mainly due to the procurement of military equipment, including infantry fighting vehicles. Expenditures in the transport sector also increased, including the purchase of trains. Expenditures on EU projects and the Recovery Fund amounted to €532.9 million (+2%).
Expenditures on the Rail Baltica project amounted to €55.5 million, which is less than a year earlier.
Expenditures on goods and services decreased by 28.3% due to large procurements in defense last year. Social benefit expenditures also slightly decreased; however, pension and benefit payments increased — €844.6 million (+5.3%). The average pension amount was €656 (+8.6%).
Revenues Do Not Match Expenditures
According to Eurostat, the deficit of the general state budget of Latvia in 2025 amounted to €1.1 billion (2.5% of GDP), sharply increasing compared to 2024 (1.8% of GDP).
It will be even more. According to the updated forecast of the Ministry of Finance, the deficit in 2026 will amount to 3.0% of GDP.
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