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Ceturtdiena 22.02.2018 | Name days: Rigonda, Adrians, Ārija
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Latvian government agrees to reduce social tax and preserve current level of PIT

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis Tuesday, August 13, the Latvian government agreed to reduce the rate of the employees’ state social insurance payments from 11% to 10% next January. The government also agreed to keep PIT at 24%.

It is planned, however, to reduce PIT by 1% every year until it is down to 22%, as reported by Finance Ministry.

The same will apply to tax-free allowance: it will be differentiated from salaries (from LVL 45 to LVL 84). Benefits for dependants will also be increased to LVL 98. The government continues working on the 2014 budget draft. Discussions with social partners will be continued as well, the ministry reports.

Ministers agreed to conceptually support a number of tax initiatives proposed by representatives of different industries. It is planned to adopt a united VAT system in regard to luxurious vehicles starting January 1, 2014. Its fiscal impact is estimated at LVL 1.0 million. FM’s submitted proposal to amend VAT Law in regard to the abolition of the input tax limitation for lightweight passenger cars; something that is used solely for economic activities.

The proposal of Agriculture Ministry to extend PIT benefits for money paid as state support or EU support of agriculture and rural development was also approved.

The government also agreed to adopt tax exemption regarding natural gas supply for the heating of industrial poultry facilities, as well as setting a minimum rate of EUR 5.65 on natural gas used in industrial production and to power agricultural raw materials processing machinery. This initiative’s fiscal impact is estimated at LVL 1.2 million.

The proposal to review the excise tax on liquefied petroleum gas (LPG). It is expected to have a fiscal impact of LVL 2.8 million. The proposal of the Economy Ministry to gradually increase the excise tax rate is being reviewed by the government.

Ministers reached an agreement regarding pensioners’ (monthly) tax-free allowance, additional benefits for disabled individuals, politically repressed individuals and members of national resistance movements. This initiative’s fiscal impact is estimated at LVL 1.3 million.

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