Latvia ranks second among the countries of the Organisation for Economic Co-operation and Development (OECD) in terms of tax system competitiveness, second only to Estonia, according to the results of the latest study "International Tax Competitiveness Index" conducted by the American think tank "Tax Foundation".
Index: Latvia has the second most competitive tax system among OECD countries Riga, November 5, LETA. Latvia ranks second among the countries of the Organisation for Economic Co-operation and Development (OECD) in terms of tax system competitiveness, second only to Estonia, according to the results of the latest study "International Tax Competitiveness Index" conducted by the American think tank "Tax Foundation".
Latvia has maintained its second place in this index for the eighth consecutive year.
The authors of the study note among the strongest aspects of the Latvian tax system that corporate income tax is levied only on distributed profits, while reinvested profits are exempt from taxation. Additionally, the territorial tax system, which provides exemptions from tax on foreign dividends and capital gains, as well as the absence of taxation on withholding taxes on interest payments, dividends, and royalties paid to non-residents, has received positive recognition.
Among other advantages, the broad base of the value-added tax (VAT) is mentioned - it covers approximately two-thirds of final consumption.
Among the weaknesses of the Latvian tax system, "Tax Foundation" experts note the relatively limited number of countries - only 63 - with which Latvia has double taxation avoidance agreements. They also point to strict requirements for the debt-to-equity ratio and a high threshold for VAT payer registration compared to the OECD average.
For the twelfth consecutive year, Estonia has been recognized as the country with the most competitive tax system among OECD members.
New Zealand ranks third in the rating, followed by Switzerland, while Lithuania has maintained its fifth place. Next are Luxembourg, Australia, Israel, Hungary, and the Czech Republic.
The USA ranked 15th, Germany 20th, Finland 24th, the UK 32nd, Poland 35th, and at the bottom of the ranking are Italy and France.
In terms of individual tax categories, Latvia holds the following positions: 1st place for business taxes, 7th for personal taxes, 20th for consumption taxes, 7th for property tax, and 6th for international tax conditions.
Estonia ranks 2nd for corporate and personal taxes, 22nd for consumption, 1st for property, and 7th for international conditions.
Lithuania is in 3rd place for business taxes, 9th for personal taxes, 25th for consumption, 10th for property, and 15th for international tax conditions.
Latvia joined the OECD in 2016, Estonia in 2010, and Lithuania became a member of the organization in 2018.
