In 2020, the Latvian State Income Service (VID) raised a total of EUR 9.863 billion for the state budget, which, according to the service, corresponds to EUR 640.423 million or 6.1% less than originally planned.
Compared to 2019, the total income from the general budget of VID has decreased by EUR 53.216 million or 0.5%.
VID notes that the service’s general budget revenue collected has been affected by preventive measures to curb the spread of Covid-19.
VID representatives also mention that non-compliance with the revenue plan was most affected by revenue from VAT and mandatory state social security contributions, as well as revenue from consumption tax.
VAT revenues were the worst in both 2019 and 2020.
In 2020, VAT of EUR 2.545 billion was levied, which is EUR 103.688 million or 3.9% less than in 2019 and EUR 340.272 million or 11.8% less than planned. “This can be explained by the cut in payments due to the state of emergency, which could not be offset by the increase observed from July to November. Apart from that, there was also an increase in VAT returns compared to 2019 ”, explained VID.
According to the service, EUR 939.82 million was repaid from VAT in 2020, which is EUR 42.8 million or 4.8% more than in 2019. In 2020, the largest drop in premiums was observed in transactions with real estate, accommodation and catering service providers, while the largest increase in yields was seen in construction workers.
Labor tax revenue was € 5.319 billion or 53.9% of total revenue in 2020, a decrease of € 137.95 million or 2.5% less compared to 2019.
The reduction in revenue is associated not only with the declaration of the state of emergency in the spring of 2020, but also with the restrictions that remained in the summer after the end of the first state of emergency, as well as with the state of the second state of emergency from November 2020.
State social security contribution revenues in 2020 amounted to EUR 3.501 billion, which is EUR 8.657 million or 0.2% less than in 2019 and EUR 141.905 million or 3.9% less than planned. PIT sales in 2020 were EUR 1.817 billion or EUR 129.293 million or 6.6% less than in 2019 and EUR 59.147 million or 3.4% more than planned.
A total of EUR 178.85 million of income tax was repaid in 2020, which corresponds to EUR 14.42 million or 8.8% more than in 2019.
Excise tax revenues in 2020 amounted to EUR 1.06 billion, which is EUR 4.371 million or 0.4% less than in 2019 and EUR 143.716 million or 11.9% less than planned. ‘Excise tax revenues in 2020 exceeded the previous year’s revenues in just six months. However, the overall sales plan was not achieved in any month of the year. This can be explained by the Covid-19 restrictions on leisure, tourism and socialization, which have had a major impact on the consumption of excise goods, ”explains VID.
Corporate tax revenue in 2020 was EUR 207.452 million, which is EUR 162.675 million or 4.6 times more than in 2019, but still EUR 53.588 million or 20.5% less than planned. The rapid rise in revenue can be explained by small businesses in 2019, where taxpayers receive overpaid tax prepayments resulting from a change in the tax filing regime.