Small banks may not be subject to excess profit tax. This was announced on Wednesday, August 28, by Economy Minister Viktors Valainis at the opening of the new Indexo banka. The minister stressed that the government has no plans to punish banks with a new tax; the main goal is to promote lending growth so that money returns to the economy. According to Valainis, annual lending growth should be at the level of 8-10%. At the same time, the government will think about how to separate small banks from large ones. Firstly, they are already actively lending, and secondly, if the excess profit tax does not apply to them, the budget benefit will not decrease much. "Small banks have many projects that can be financed, and their loan portfolio has already shown an annual growth of 10% compared to the same period last year. For comparison: for large banks this figure is only 3%. And we need to figure out how to stimulate them to act more actively," the minister also explained about the division of banks. The minister also noted that Latvia may introduce an excess profit tax for banks on an individual basis – that is, if a bank shows an increase in lending at a set level, it will not have to pay an excess profit tax. Valainis also noted that in addition to the excess profit tax, the government is developing other tools to motivate banks to lend more actively. An excess profit tax may be introduced for banks starting next year.
