(Bloomberg) -- Latvia’s government backed a tax on the financial sector’s profits for three years to help fund defense spending as the Baltic country boosts security after Russia’s invasion of Ukraine.
The levy, which targets banks’ net interest income, is expected to raise €93 million ($102 million) in 2025 and €85 million annually in the following two years, the Finance Ministry said in a statement. Institutions that increase lending can reduce the tax.
“This law will help find additional resources to ensure the state’s fiscal needs for national security,” Finance Minister Arvils Aseradens said after the government met in Riga Tuesday.
Latvia has been raising defense spending since the Kremlin’s 2022 invasion of Ukraine, while the authorities have supplied Kyiv with weapons and been a vocal proponent of more sanctions on Moscow.
Parliament stills need to approve the so-called Solidarity Contribution bill before it goes to President Edgars Rinkevics to be signed into law.
©2024 Bloomberg L.P.
