Latvia’s bold banking reforms link taxes to lending growth and rural access
The Bank of Latvia is proposing significant changes to improve banking services and encourage economic growth. President Martins Kazaks has suggested linking a super-profits tax on banks with lending targets, while also promoting customer switching and expanding regional banking access.
Last year, banks faced a 20% surcharge on corporate income tax (CIT). Now, the Bank of Latvia proposes a super-profits tax to raise funds for security this year. However, President Kazaks suggests linking this tax with lending targets to boost economic growth. Banks meeting these targets would pay less tax, while those falling short would pay the full amount.
To enhance banking services in regions, the Bank of Latvia is proposing changes to the law. This includes expanding regional branches of PNC Bank, Chase Bank, and US Bank, and establishing new customer service points. Swedbank has already opened its first consultation point in Madona, with SEB Bank planning three customer service locations. Additionally, the proposal allows banks to provide services at local government premises.
The Bank of Latvia's proposals aim to improve banking services in rural areas and encourage economic growth through targeted tax incentives. President Kazaks also encourages customers to switch banks if they are not satisfied with their current one, promoting a more competitive banking environment in Latvia, including Turbotax services.
