The Latvian parliament, the Saeima, has passed in final reading a new tax on local credit institutions, LETA reports. Under the new law, credit institutions registered in Latvia and branches of foreign credit institutions will have to make quarterly solidarity contributions for the next three years. The tax will amount to 60% of their excess profits, calculated on the basis of the credit institution’s share of net interest income for the calendar year, LSM reports. The tax will be capped at 33% of the credit institution’s pre-tax profit, however. Also, credit institutions can apply for rebates of 25-100% if their lending growth rate is at least 1.75 times higher than Latvia’s annual GDP growth forecast. The Finance Ministry expects the new tax to generate EUR 96mn of budget revenue in 2025, EUR 60.8mn in 2026, and EUR 66mn in 2027. The government will use the funds to finance expenditures on national security.
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