Latvia may be a small country with its 2,3 million inhabitants, but located at the center of the three Baltic States, Latvia provides a strategicaly favourable location as a commercial, financial and transportation center and is therefore attractive market for foreign investors.
The Latvian economy is based largely on service industries including transportation, financial, retail and business services, and on light industry, e.g., wood, textiles, food processing. There is a well-developed transportation networking, stable monetary conditions and a favourable taxation regime. Manufacturing has developed and expanded considerably comparing to mid-90’s. Main reasons are money flowing in from EU structural funds and the stable legislation system, which is a good precondition for business and foreign investors. More and more new production units and companies are open in the last years. The biggest inflation growth is in the fields of trade, real estate, finances and building.
Latvia has been a member of the WTO since 1999 Latvia, and joined the EU and NATO in 2004, approving its belongingness to the western society as well as its constant willingness to improve. That has brought some major positive changes in every business and cultural aspects and has lead to a stable business environment that has attracted more and more local as well as international investors.
Going through constant changes has influenced the way Latvians are doing business. They are said to be most flexible and one of the most hospitable business people among European countries and able to conduct successful business in different environments.
The most popular form of business entity is SIA (similar to Dutch BV). It is the less regulated form as well as it is the easiest way to set up a business. The income tax for legal entities is 15% (before filling the relevant tax declaration), individuals 26%. There are very many small companies in Latvia with quite closed circle of customer which are very effective and can adapt to their customer needs most effectively in the same time there are also very big market players with huge capacities. And that obviously means that you will be able to find the most appropriate business partners for your needs. There are different people living in Latvia and with more different business approaches making the market even more interesting and more attractive.
The main values in Latvia for entrepreneurs are rather low cost and effective labor, its geopolitical location and its international approach to everything and well established contacts with Eastern markets. Meantime mentioned labour is also a struggling point for several businesses as the shortage in few fields has been noticed.
For more helpful information, see the Latvian Institute link: