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International Internet Magazine. Baltic States news & analytics Thursday, 09.04.2020, 20:12

Micro enterprise tax should be preserved, but changes are necessary - Reirs

BC, Riga, 20.02.2020.Print version
The micro enterprise tax regime should be preserved, but changes are necessary, said Latvian Finance Minister Janis Reirs (New Unity) in an interview with the Latvian public radio today, referred LETA.

As reported, in the context of upcoming tax changes, ministries propose to restrict the micro enterprise tax regime in the coming years, according to the proposal on tax policy guidelines for 2021-2025. 

The minister said that there had been different views in the government about the micro enterprise tax, but in his opinion, the micro enterprise tax regime should be preserved in order to preserve business in regions, but it should be changed in order to promote residents to pay taxes. Also, this tax regime should promote new businesses.

In line with the present regulations, the maximum annual turnover of a micro enterprise is EUR 40,000, and the company may employ up to five people. The micro enterprise tax rate is 15% of the turnover, and 25% of the turnover that exceeds the maximum restriction.

Starting from 2021, the micro enterprise tax rate will be raised to 25%, the number of employees will be cut to one, and the maximum turnover to EUR 20,000 a year. The micro enterprise tax to be paid for exceeding this limit will be set at 40%.

At the same time, as of 2022, an additional rate at 20% will be introduced for a legal entity, paying for services.

These changes will add EUR 50-70 mln to the budget annually.

In 2023, efficiency of the micro enterprise tax regime and its future should be revised repeatedly.

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