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Latvian parliament approves new tax on high salaries

Xinhua, December 1, 2015 Adjust font size:

Latvian lawmakers at an extraordinary parliamentary session on Monday adopted a bill introducing a new tax that will be applied to high salaries as of next year.

The so-called solidarity tax, which has been strongly criticized by Latvia's business organizations, including the Latvian Chamber of Commerce and Industry, intends to make the taxation system less regressive, because currently, annual salaries that exceed 48,000 euros (about 50,880 U.S. dollars) are exempt from social security tax.

"This tax will correct the unfair situation where certain persons can pay significantly less in taxes on their labor income," the country's Finance Ministry said.

The rate of the solidarity tax will be the same as the social security tax rate, or 34.09 percent.

The new tax is expected to affect some 4,700 of the highest-paid professionals working in Latvia.

Over the next three years, the solidarity tax is expected to bring in 40.9 million euros in additional budget revenue annually, the Finance Ministry said. (1 euro = 1.06 U.S. dollars) Endit