A case on surcharge of the enterprise income tax has been initiated
According to the application of a consumer crediting service provider, a case has been initiated before the Constitutional Court on compliance of Section 4.1(1) of the Law on the Enterprise Income Tax with the first sentence of Article 91 and the first and third sentences of Article 105 of the Constitution of the Republic of Latvia.
The applicant provides consumer crediting services with a fixed loan interest rate and is a payer of the enterprise income tax.
The contested provision provides that the applicant is obliged to pay the surcharge of the enterprise income tax. The legislator has allegedly stipulated such a surcharge in relation to increased profit of credit institutions after the decisions of the European Central Bank to raise the rate of the Euro monetary market benchmark (EURIBOR). However, the fixed loan rate applied by the applicant does not include the benchmark rate (EURIBOR). Therefore, contrary to the first sentence of Article 91 of the Constitution, the legislator has allowed the contested provision to set an equal treatment towards groups of persons existing in different circumstances: credit institutions providing loans with variable and fixed loan interest rates and consumer crediting service providers which mostly provide loans only with a fixed interest rate. The duty provided for in the contested provision to pay the surcharge of the enterprise income tax also allegedly infringes on the property right of the applicant included in the first and third sentence of Article 105 of the Constitution.
The Constitutional Court invited the institution that has issued the contested law – the Saeima – to submit to the Constitutional Court a reply with the explanation of the actual circumstances of the case and the legal basis by 27 May 2024.
The deadline for preparing the case is 27 August 2024. The Court will decide on the procedure and date for hearing the case once the case is prepared.
Related Case No. 2024-04-01
Linked case: 2024-04-01