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Latvia

Basic Information

Area: 64,589 km²

Calling code: +371

Population: 2,270,700

Official Language: Latvian

Time zone: EET (UTC+2), Local time: 10:54

Overview

The Republic of Latvia is located in North-Eastern Europe, and it has territory that covers a total of 64,589km2, with 498km of coastline along the Baltic Sea. It shares its borders with four other European countries: Belarus, Estonia, Lithuania and Russia. The population has been declining since the 1970’s, with 2.231 million people currently residing in the country, 68% of which live in urban areas.

The capital city of Riga is situated on the northern coastline, and it has a population of 709,145, making it the largest city in all of the Baltic states. Another large city is Daugavplis, which is 230km south-east of the capital and has a population of 103,754.

The country is sub-divided into 118 municipalities, 109 counties and 9 cities, for both administrative and geographical purposes. Latvia became a member of the United Nations in 1991, and it became a full member of the European Union in 2004. It aims to join the eurozone by 2013, which will see the euro currency replace the current Latvian lat (LVL).

Economy

Latvia’s economy experienced a rapid increase in growth from 2003 to 2008, where the peak GDP growth rate was 7.5%. Most companies have been privatised, and now only a small number of state-owned companies remain. The majority of the economical activity is centered around the city of Riga, which has seen a rise in businesses in the service sector, particularly in those related to telecommunications, banking and Information technology. The largest companies and employers in the county include Fazer Maiznica Druva (food), Lattelecom (telecommunications), Latvijas Gaze (energy and water) and Multibanka (banking).

Industry generates over a quarter of Latvia’s GDP figure of $24.48 billion, primarily from the manufacturing of automobiles, fibers, electronics, pharmaceuticals, machinery and agricultural materials. In 2009 Latvia exported $6.27 billion worth of goods, mainly to the countries of Lithuania, Russia, Estonia, Germany and Sweden. It relies on imports for some of its energy needs, and in 2009 it imported $8.84 billion worth of goods from European countries.

Latvia has over 50,000 privatised farms, and agricultural land is mainly used for the cultivation of barley, rye, potatoes and rapeseed along with the rearing of cattle. Agriculture contributes 3.5% of the GDP, and employs over 140,000 people.

Infrastructure

Latvia is served by 43 airports, 20 of which have paved runways. The largest and most frequently used is the Riga International Airport (RIX), which is situated 6.2km west of Riga’s city centre. It is the largest of all airports in the Baltic states and offers flights to over 60 destinations, in 30 countries. Air Baltic, Ryan Air and Wizz Air all operate services to London Airports, with an approximate flight time of 2 hours and 30 minutes.

Train services are provided by the state-owned Latvijas dzelzceļš, who manage routes on 2,298km of track. The central hub for the railway network is Riga Station, and from here it is possible to catch high speed trains to the adjacent countries of Russia, Lithuania, Belarus and Estonia.

The 300km of waterways allows for passenger and cargo transportation, and there are 3 major ports in the country: Liepaja, Riga and Ventspils

Workforce

Latvia has a total workforce of 1.2 million, 61% of which work in the service sector, 25.8% in industry and 12.1% in agriculture. In 2009 only 59% of the entire population were Latvian nationals, the remaining ethnic groups mainly consist of Russians, Belorussians, Ukrainians, Poles and Lithuanians. The official sole language is Latvian, while the last census showed that 71% of ethnic Latvians spoke Russian as a second language.

The education system has restructured itself, with education provided free of charge to all citizens up to the age of 15, and attendance is compulsory. After completion of secondary school students can choose to further their education in one of the countries higher education institutes. The largest and most prestigious is the University of Latvia, which is located in Riga, and has a student population of over 22,000. The university has 13 different faculties, from biology to medicine, each offering fully accredited degree programmes. The compulsory education system helps to produce a high national literacy rate of 99.7%.

Business Costs

Commercial property prices have increased dramatically over the past decade, however rental costs are still relatively low in comparison to many other European countries. The Cushman & Wakefield, 2010 Office Space Around The World Report, ranks Riga as having an average yearly lease price of just $19.16 per square foot, which is on par with prices in the cities of Tallinn and Lima. Utility costs such as electric and gas also remain amongst some of the lowest in Europe.

In 2009 Latvia increased the national minimum wage, which now ensures all legal workers are paid at least 180 lats per month, which converts to £218.31 a month, while the minimum hourly wage is 1.083 lats which is the current equivalent of £1.30 an hour. Wages are highest in the capital city of Riga, while the average wage of all workers in the country is 440 lats a month (£533.74).

All individuals working in Latvia are required to pay income tax, which is taxed at 26% on all income earned a year. Corporate tax rates are amongst the lowest in Europe, at just 15% on gross annual profits for most companies operating from the country. There are several beneficial deductions on expenses, and for property depreciation, which makes the corporate tax rate even more favourable for the business owner. Social security contributions are also mandatory, with 9% payable by the employee and 24.09% by the employer. The VAT rate has recently been raised to 21% on most goods and services, although a discounted rate of 10% is available for medications, some equipment and communication services. All educational, medical, cultural and financial related institutions are exempt from paying any tax, along with any gambling or lottery based companies.

We are currently looking for 15 companies in Latvia in the following sectors - Accommodation, Commercial, Professional and Medical, to assist incoming business.

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