Assessment of corporate income tax in the Baltic States
2015
Vitola, I., Latvia Univ. of Agriculture, Jelgava (Latvia). Faculty of Economics and Social Development | Antonovs, A., Latvia Univ. of Agriculture, Jelgava (Latvia). Faculty of Economics and Social Development
A favourable and stable tax policy, predictability of taxes and well-structured taxes are the key drivers for the development of new enterprises and the attraction of investment as well as a significant driver for the sustainability of existing enterprises and economic growth in the country. The aim of the research paper is to identify how some elements of the corporate income tax of Lithuania and Estonia might be applied in Latvia. Both in Latvia and in Lithuania, taxable income is adjusted for the depreciation of fixed assets. In Latvia and in Lithuania, the taxable income is also adjusted for fines and penalties paid in the reporting year. Lithuania’s enterprises are entitled to more favourable tax adjustments for costs unrelated to economic activity, as theses costs do not have to be added to their pre-tax profit. In Latvia, undistributed profit has to be taxed as in Estonia, setting a 0% enterprise income tax rate on undistributed profit.
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