Corporate income tax rate in Latvia is one of the lowest in the European Union and is favourable for business. However, the government additionally uses numerous CIT reliefs to stimulate investments, to promote specific industries and investors. Total costs of these tax reliefs are high, but many of the goals declared by their introduction are not reached, suggesting that tax relief efficiency could be questioned. The efficiency of the existing and potential CIT reliefs should be regularly evaluated. The suggested criteria for such examination are – clear objective, type of taxable rent, existence of positive externality, appropriate design and potential for tax planning, costs in revenue foregone, administrative burden.