“Latvia will become the common currency area’s newest member in January 2014 — the same time that new tax laws go into effect allowing the country to compete with the likes of Cyprus and Malta. This could further destabilize the European economy”.

According to Der Speigel, Latvia’s Corporate Income Tax (CIT) is 15%, which is notably lower than the average EU value – 23.5%. The only CIT rates that are lower than than the one in Latvia are those of Ireland and Cyprus – 12.5%.

The latest data of Eurostat show that Bulgaria and Cyprus have the lowest CIT – 10%. Ireland has the second lowest CIT value – 12.5%. Latvia’s and Lithuania’s CIT rate is 15% – the third lowest in the EU.

“Holding companies — firms that hold stock of other companies — enjoy further benefits in Latvia. Since the beginning of 2013, their foreign profits earned via dividends and stock sales have been tax free. Transferring such profits out of country is also not taxed. Furthermore, as of 2014 Latvian holding companies will no longer have to pay taxes on interest and licensing fees they pay to foreign companies.”

“Such structures allow foreigners to not only park their money in Latvia, but also use it as a bridgehead to transfer money at low cost from Europe to tax havens such as the Cayman Islands. Indeed, Latvian law will impose even fewer limitations and lower fees for such transfers than exist in such countries as Malta, Ireland, Cyprus and the Netherlands”, – Der Spiegel writes.

Source: Baltic New Network

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