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Why Invest in Latvia
Labour force: Latvia is praised for its population, which knows new technologies, speaks several languages, understands the markets of the CIS and the EU, and provides a cost efficient investment choice.
Currency: Strict monetary policies and low deficit budget have guaranteed the stability of the national currency, the Lat.
Latvia’s geographic location is supported by an excellent transportation infrastructure. Three major ports (two ice free year round), along with a network of roads and railways are helping to turn Latvia into a transit specialist.
Latvia has achieved political and economic stability. On September 20, 2003, in a nationwide referendum, the Latvians voted to join the European Union and Latvia’s EU membership took effect on 1 May 2004. Latvia became a member state of NATO on March 29, 2004. Reforms accomplished in Latvia and integration in the EU have left a positive impact on the economic development of the country.
A dynamic capital: Latvia’s capital, Riga, is regarded as the capital of the Baltic Region. Riga is the region’s largest transport hub, a rapidly growing finance and commercial centre, and a metropolis of culture, tourism, education and entertainment.
The Latvian government welcomes foreign investors to Latvia. Foreign investors enjoy all of the same rights and opportunities as local investors, and they are offered investment incentives. Particular advantages are available at Latvia’s free ports and Special Economic Zones.
Easy to start-up business: Latvia is ranked among the top ten countries worldwide in terms of business start-up time and length of bankruptcy procedures, according to the recently published World Bank report Doing Business (Oxford University Press), which analyses business regulation in 130 countries across the globe (rru.worldbank.org).
Tax reduction: The government’s tax policy is aimed at the reduction of the tax burden on entrepreneurial activity, which would foster economic growth and ensure competitiveness. Currently the corporate income tax rate in Latvia is among the lowest (15%) in the EU. In addition, legislation provides special corporate income tax relief for large-scale investment projects as well as for enterprises operating within the special economic zones.
Investing in Latvia
5 Reasons to Invest in Latvia
Corporate income tax: 15%
Personal Income tax: 25% flat
Days needed to open a Limited company: 3 working days
Average Salary level: Lowest in EU
4 Special Economic Zones with special taxation regime
Invest in Latvia
Latvia, officially known as the Republic of Latvia is a country located in the historically significant Baltic region on the Northern part of Europe. The country is a landlocked country, it is bordered by Estonia in the north and on the southeast Latvia shares its border with Belarus, on the east lies the Russian Federation and on the west it shares its border with Sweden along the coast of Baltic Sea. Latvia being located on the eastern sides of the European plain it has a very pleasant climate and also boasts of fertile soil which is suitable for growing a large variety of crops. Latvia also has a big forest cover that is home to some of the most exotic plants an animal species.
The country is one of the key players in the European Union. Latvia, in the recent years have become a hot spot for investment, increasing number of global players are looking to invest in the country and are benefitting for its favorable investment policies. Foreign companies investing in Latvia can enjoy the following advantages:
– Latvia has a very stable bureaucratic set up; this is very useful for foreign investors looking to establish their business base in the country since they can do it without any hassle.
– Latvia also has a transparent and non-biased legal and judicial system in place. it allows the foreign companies to settle any issues fair and square.
– Latvia being a part of the European Union (EU), foreign investors in the country are provided free access to market of other countries which are part of the EU. This is a very significant advantage for investors since they can do business without borders and expand their business base.
– Latvia has a very global business outlook. The work culture throughout Latvia is world class, most of business enterprises in the country work according to the standards of other European nations.
– Labor force is the backbone of any industry and in Latvia there is no shortage for it, foreign investors in Latvia can have access to the huge base of high educated and technically qualified workers. The labor charges in Latvia are also cheap as compared to other countries in the European Union.
During the past 5 years, Latvia has experienced significant growth in its economy and it has developed into one of the best economies in the European Union. Most of the industrial sectors in the country have grown drastically and have contributed towards the country’s GDP (Gross Domestic Product).
Like most countries in the world Latvian economy took a major jolt during the economic crisis that threatened the world economies during the third and fourth quarters of 2008, which continued during the early half of the 2009. The GPD slumped to a considerable extent during this period.
However, the federal government of Latvia was determined to not to let the global economic crisis affect the inward flow of foreign investment in the country. To cope with the crisis, the government of Latvia set up several programs to attract FDI (foreign Direct Investment) in the county and give a major boost to the national economy and pave way for growth and development of the country and be at par with other industrially developed and technologically advanced countries of the European Union.
From the economic view point, Latvia is a key player in the European Union. The country has one of the fastest growing markets in the European Union. Over the past few years, Latvia has consistently recorded highest GDP (Gross Domestic Product) growth rates in Europe. The prime reason for the significant is the rich consumption by the locals.
However, during the recession that severely hit the global economy during the later part of the 2008 and the early 2009, the Latvian economy slumped and its GDP fell down drastically at about 18%. The Latvian economy receive a huge support from the IMF (International Monetary Fund) and EU, both rescued the economy with their funds and helped the fiscal deficit by 5% of the GDP. With the decline of recession, the economy recovered well and it registered a significant growth in 2010 and promises to grow further over the next few years.
According to 2009 reports released by the Latvia government, Latvia’s GDP (purchasing power parity) was about $32.4 billion. The major contributing factor to the GDP were the industrial sector, it contributed to 24% of the national GDP and the service sector was the most important contributing factor to the GDP, it represented 72.4% of the GDP. The GDP per capita for the year 2009 was about $14,500.
FDI – Investment Policy:
The Latvia federal government has formulated special foreign investment friendly policies to encourage maximum investment from foreign companies. The government provides several financial grants to foreign investors investing in the country. The grants are mainly in terms of tax exemptions and loans at very cheap interest rates.
The government of Latvia provides the following special incentives to foreign investors investing in large projects:
– The government provides corporate tax allowance up to 40% for up to 10 years on investment in certain sectors like real estate, technology and equipment.
– The government also provides organizational and administrative support to businessmen to help them establish their business. Besides the government also provides grants for training of the laborers and development of infrastructure.
Key Investment Sectors:
Latvia has huge industrial sector and its economy is noted for its large manufacturing wing and there is plenty of scope for foreign investors to investing in its diverse manufacturing sectors. Foreign companies can consider investing in various segments like
- Wood processing
• Food processing
Since Latvia is located in close proximity to the Baltic Sea, foreign investors can greatly benefit from it, since it provides a perfect gateway for transportation of goods.
To attract foreign investment in the country’s manufacturing industry, the Latvian government is keen to privatize the sector keeping in mind its contribution to GDP. Since the government of Latvia has privatized the manufacturing sector barring a few sensitive industries, the inflow of FDI was about $11.46 billion in 2009.
Latvia is truly a world class destination to invest, it has all the elements to become a industrial hub in the future. Foreign companies investing the country are sure to earn valuable returns on their investments.
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