Latvian financial sector criticizes bank solidarity contribution

Uldis Cērps, chairman of the Financial Services Association, has criticized the bank solidarity contribution in Latvia, describing it as a political rather than economic tax. He argues that while the levy generates budget revenue, it acts as an additional burden on businesses and individuals, effectively taking more than 7% of the interest payments made by borrowers.

Cērps noted that in 2025, 74 million euros were paid via this contribution, with 40 million euros collected so far this year. He highlighted that the tax was implemented without sufficient analysis, despite warnings and recommendations to avoid such measures from the European Central Bank and the International Monetary Fund.

The association head also expressed concerns regarding Latvia's competitiveness. He pointed out that similar taxes are not present in Lithuania or Estonia, which may lead credit committees to favor projects in those neighboring countries over Latvian ones due to the higher tax burden in Latvia. Additionally, he cited increased administrative requirements and the mandate to open branches outside of Riga as further obstacles to the financial sector's ability to fund the national economy.