Bank of Latvia supports Finance Ministry's proposal on advance corporate tax payment for banks

  • 2023-08-14
  • LETA/TBT Staff

RIGA - The Bank of Latvia supports the Finance Ministry's proposal on the mandatory advance payment of corporate income tax to banks in the amount of 20 percent of the previous year's profit, representatives of the central bank told LETA.

The Bank of Latvia voiced its support to this proposal also in a work group that worked on development of the tax policy guidelines for 2024-2027.

The Bank of Latvia will continue its dialogue with commercial banks to ensure their larger involvement in the economy, expecting better availability of financial services and more interest in clients.

As reported, the mandatory tax payment could be included in next year's package of budget bills and would have an additional fiscal effect of up to EUR 140 million.

The ministry explained that the proposal to introduce advance payment of the corporate income tax would be mandatory for banks and would be calculated on the basis of the bank's profit for the previous accounting year, applying a 20 percent rate. This solution could be introduced as a permanent legislative norm. A similar model exists in Estonia, but the rate for advance payments to banks is 14 percent.

As reported, Latvian monetary financial institutions, mainly banks, made a profit of EUR 335.9 million in the first six months of this year, which is 2.6 times more than in the corresponding period of 2022, according to information published by the Bank of Latvia.