Corporate Income Tax Reform Possibilities for Latvia

Abstract

Taxation policy is one of the main instruments which can affect some national economy sectors, ensure development of any territory by special provisions in tax laws. The current Latvian tax policy is mainly based on the continuation of the tax policy followed since the tax reform of 1995, generally the system goal was to ensure capital inflow and capital market activities, with the aim to increase foreign direct investment and promote the development of the national economy. Research of the current status of taxation policy and quality of the state budget revenue sources enabled to suggest some short-run solutions; to ensure the competitiveness of domestic supply, shifting incentives from dividends and income distribution to investments in the real economy; and also generating state revenues with the aim to reduce domestic demand. Implementation of prepared recommendations gives a premise to ensure the development of Latvian national economy and also competitiveness of Latvian tax system.

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