Financial Services, Latvia, Taxation

The petitioners point out that the solidarity goes against Articles 3, 5, 6, 7, 9, 91, and 109 of the Constitution.

Companies that object to the social tax note in their petitions that they employ highly-qualified experts and pay them accordingly. The obligation to pay the solidarity tax means that these companies now have fewer opportunities to hire such experts, and they are put in a disadvantage as compared to companies that do not employ such experts. This lessens competition on the labor market and violates the principle of equality.

Likewise, employees who have complained to the Constitutional Court claim that the solidarity tax violates the principle of equality and limits their rights to social protection.

The Constitutional Court will be waiting for Saeima's comments and explanations until September 21.

As reported, several businessmen and companies have turned to the Constitutional Court with appeals against the so-called solidarity tax, Latvian Chamber of Commerce and Industry (LCCI) told LETA earlier. After the LCCI urged businessmen to turn to the Constitutional Court to have the solidarity tax abolished, 20 private individuals and nine companies have responded by turning to the Constitutional Court, claiming that they have to be compensated what they have overpaid in solidarity tax, and demanding that the tax be lifted.

The tax on high salaries, or the so-called solidarity tax, came into effect on January 1. The solidarity tax is levied on the part of highly-paid employees' salaries exceeding the ceiling for mandatory social security contributions.

In 2015, the ceiling was EUR 48,600 a year or slightly more than EUR 4,000 a month. According to estimates based on last year's data, the new tax applies to some 4,700 working-age people in Latvia.