Financial Services, Latvia, Legislation, Markets and Companies, Taxation

The government also tasked the Economics Ministry with drawing up some adjustments to the bill before its second reading in Saeima.

The draft legislation is intended to keep the rules for the payment of microenterprise tax simple and the microenterprise tax rate at 15% of turnover in order to ease the administrative burden on new businesses and enterprises with small annual turnover.

Although the Economics Ministry had originally proposed to lower microenterprise's annual turnover limit to EUR 50,000 from EUR 100,000, now it has been proposed to set the limitation at EUR 40,000.

Under the latest proposal, the caps on the maximum pay for microenterprises' employees would be increased to EUR 900 a month from EUR 750 a month.

General taxation rules will apply to those microenterprises' employees who receive more than EUR 10,800 a year, but employees will be allowed to simultaneously work at several microenterprises.

Of the budget revenues generated from the microenterprise tax 80% will be paid into social security contributions account.

The Economics Ministry indicated that the microenterprise tax regime will be available not only to the existing payers of microenterprise tax but also to people involved in economic activity and meeting the requirements for microenterprises. It is expected that the new regulation could apply to 27,000 existing payers of microenterprise tax, employing 68,000 people.

As reported, the Cabinet of Ministers today is revising the remaining bills related to tax reform – amendments to the Law on Personal Income Tax, the Law on Solidarity Tax, the Law on Excise Tax, the Law on State Social Insurance, the Law on Corporate Income Tax, and Micro Enterprise Tax Law.

After the government adopts the amendments, they will be sent to Saeima who might adopt the bills in the second reading on July 21.