Financial Services, Latvia, Taxation

“We always tend to compare the situation in Latvia with our neighbor countries and conclude that the situation in the neighbor countries is better. The neighbor countries do not have so many tax regimes, so their tax authorities need less resources for tax control. Should our society pay for having the seven tax regimes? Perhaps we need four, which would be easier to manage and less burdensome,” said Reirs.

The minister said that the number of tax regimes should be revised, especially because not all of them provide for social protection.

“In 2018, savings in the social budget totaled EUR 202 mln, which is a substantial source in the event of crisis. In this year’s budget we have planned savings worth EUR 240 mln. But this only applies to those more than 600,000 people who are paying their taxes in the general regime, while 300,000 people remain socially unprotected. And the special tax regimes permit that,” the minister said, adding that while special tax regimes might be justifiable for some time, eventually they lead to social risks.

Asked if he would be prepared to revise the microenterprise tax regime, which economics experts have been calling for, Reirs said that he had tried to do that already before but that such reforms had to be approved by Saeima.

At the same time, Reirs believes that the microenterprise tax regime might be effective in certain cases, for instance, in rural regions.