Latvia places third among OECD’s member states for tax competitiveness

Latvia’s tax system ranks third among those of the Member States of the Economic Cooperation and Development (OECD), according to the organization's latest "2016 International Tax Competitiveness Index." In the individual tax category, Latvia takes the 2nd place, in the property tax category Latvia ranks 6th, in personal tax index – 7th, and in the international tax condition category Latvia ranks 2nd place behind the Netherlands. Latvia joined OECD earlier this year. The report notes that "Latvia, which recently joined the OECD, has a relatively low corporate tax rate of 15 percent, speedy cost recovery, and a flat individual income tax."

Among the 33 countries that Latvia outscores is Switzerland, Sweden, the Netherlands, Luxembourg, Australia, Slovakia and Turkey. In comparison, the United Kindgdom ranks 16th, Germany – 20th, Japan – 25th, United States – 31st, Greece – 32nd, Portugal – 33rd, Italy – 34th. The tax system in France is recognized as the least competitive among the OECD member countries for the third years in a row. OECD concludes that France has one of the highest corporate tax rates in the OECD (34.4%), high property taxes, annual wealth tax, financial transaction tax and real estate tax.

The "International Tax Competitiveness Index" is evaluated on how well the national tax system is able to promote sustainable economic growth and investment. The report examined more than 40 tax policy indicators into five categories: corporate income taxes, personal taxes, consumption taxes, property taxes and the treatment of profits abroad.

OECD is an intergovernmental organization composed of 35 most developed countries in the world, including 22 European Union Member States. In order to qualify for membership in the organization, a country must meet four criteria – be like-minded in terms of democratic principles and free market, be a significant player, have mutual interests and global considerations. However, meeting these criteria does not mean an automatic membership to OECD. The decision to accept a new member state is based on OECD's strategic interests, geopolitical balance, economic performance of individual candidates as well as the organization's ability to integrate new countries.

Source: LETA