Starting from 2017, micro-enterprise tax rate in Latvia will be 15% of turnover. At the same time, the government has decided to cancel the introduction of minimal social insurance fees. This is provided by amendments to Micro-enterprise Tax Law and State Social Insurance Law approved by the Saeima.
Micro-enterprise Tax Law was added with a norm in the second reading, stating that the tax rate for micro-enterprises with turnover under EUR 7,000 will be 12% in 2017. Changes were added to cancel amendments approved on November 23, that provided for gradual refusal of micro-enterprise tax regime.
The current regime will remain in effect until the new one comes into effect, as previously stated by Saeima’s Budget and Finance Committee’s Chairman Janis Vucans.
Businessmen, who, considering the current situation, had decided to end their activities, would be able to apply for recovery of micro-enterprise tax payer status before January 31, 2017. Amendments state that state social insurance fee will be deducted from micro-enterprise tax at 70.4% amount in 2017 and 80% in 2018.
The Saeima has also accepted amendments to other associated laws to refuse the introduction of minimal social insurance fees. The parliament cancelled the November 30’s amendments to the State Social Insurance Tax. Those amendments originally provided for the fixation of state social fees at the amount equal to three quarters of minimal wage amount.
The Saeima has also reviewed amendments to the Micro-enterprise Law returned to the parliament by President Raimonds Vejonis for a second reading. Members of the parliament asked the Cabinet of Ministers to come up with a solution for new simplified tax regulation to replace the previous micro-enterprise tax regime. The Saeima has decided that micro-enterprise regulation will remain in effect for one more year after the coming into effect of new regulations. In the second reading, the Saeima excluded rules from the law that provided for the limitation of fields in which micro-enterprises were allowed to work.
As noted in the legal draft’s annotation, in spite of the transition period, established for new legislation, changes such as that would require little restructuring from businesses. Non-governmental organization protested against amendments, fearing they would impede the achievement of goals of associations and unions.
Amendents to the Micro-enterprise Tax Law, State Social Insurance Tax Law, Law on Maternity and Sickness Insurance and Law on Unemployment Insurance will come into effect on January 1, 2017, as reported by Saeima press-service. (BNN/Business World Magazine)
