In 2020, Latvia’s State Revenue Service (VID) collected a total of EUR 9.863 billion for the state budget, down by EUR 640.423 million or by 6.1% from the original plan, according to information published by the service.
Compared to 2019, VID’s total collected general budget revenue has dropped by EUR 53.216 million or by 0.5%.
VID noted that the service’s collected general budget revenue was affected by preventive measures in place to halt the spread of Covid-19.
VID representatives also mentioned the failure to complete the revenue plan was affected the most by revenue from VAT and compulsory state social insurance contributions, as well as revenue from excise tax.
Revenue from VAT had lagged behind the most in both 2019 and 2020.
In 2020, VAT was collected in the amount EUR 2.545 billion, down by EUR 103.688 million or by 3.9% YoY, as well as EUR by 340.272 million or by 11.8% from the target.
“This can be explained with the reduction of payments because of the state of emergency, which could not be compensated by the increase observed in July-November 2020. Aside from that, when compared to 2019, there was also an increase of VAT returns,” explained VID.
According to the service, EUR 939.82 million was paid back from VAT in 2020, which, when compared to 2019, was EUR 42.8 million or 4.8% more. In 2020, the biggest reduction of contributions was observed for transactions involving real estate and accommodation and catering service providers, whereas the biggest increase of returns was observed for workers of the construction sector.
Labor force tax revenue accounted for EUR 5.319 billion or 53.9% of the total revenue amount in 2020, which was a reduction of EUR 137.95 million or 2.5% YoY.
The reduction of revenue is associated not only with the declaration of a state of emergency in spring 2020 but also the restrictions that remained in summer after the end of the first state of emergency, as well as the state of the second state of emergency from November 2020 onward.
State social insurance contribution revenue reached EUR 3.501 billion in 2020, down by EUR 8.657 million or by 0.2% YoY and EUR 141.905 million or 3.9% less than planned. PIT revenue in 2020 was EUR 1.817 billion or EUR 129.293 million or 6.6% less when compared to 2019, but EUR 59.147 million or 3.4% more than planned.
Of personal income tax a total of EUR 178.85 million was paid back in 2020, up by EUR 14.42 million or by 8.8% YoY.
Excise tax revenue was EUR 1.06 billion in 2020, down by EUR 4.371 million or by 0.4% YoY, as well as EUR 143.716 million or 11.9% less than planned.
“Excise tax revenue in 2020 exceeded the previous year’s revenue amount in just six months. However, the total revenue plan was never reached in any month of the year. This can be explained with Covid-19 restrictions put in place for leisure, tourism and socialization, which had severely impacted excise goods consumption,” explains VID.
Corporate income tax revenue in 2020 consisted of EUR 207.452 million, up by EUR 162.675 million or 4.6-fold YoY, but still EUR 53.588 million or 20.5% less than planned. Rapid revenue increase can be explained with small companies in 2019, with taxpayers receiving overpaid tax advance payments, which formed as a result of a change in the tax application order.
It was planned to collect EUR 10.503 billion in taxes in 2020. (BNN/Business World Magazine)