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Tuesday 17.07.2018 | Name days: Aleksejs, Aleksis

Economic Diary. Prevent a strike on small business

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIt is worth noting that the general activity and awareness of small business organisations is slowly growing in Latvia. Latvian Chamber of Commerce and Industry (LCCI) has launched a signature collection campaign against the planned increase of micro-enterprises tax.

According to Bank of Latvia, households have begun increasing their savings this year. The total volume of savings was LVL 2,982 billion in Q2 2013, which exceeds that of 2009 (LVL 2.805 billion).

Finance and Capital Market Commission (FCMC) believes this trend can be explained with the increase of the level of salaries in Latvia and low inflation. These factors allow residents to feel actual increase in their income. This allows them to further strengthen their financial stability.

SEB Group analysts have expressed their positive look on the situation in their latest “Study of financial sate of Baltic households”. In terms of growth rates of actual salaries, Latvia is ahead of its neighbours: Latvia’s level of salaries increased 5.2% in Q2 2013 (4.9% in Estonia and 3% in Lithuania).

Banking specialists have also noted that pragmatism may also be a possible explanation for the sudden increase of savings. Doing so allows residents to use a much more convenient method of adopting a new currency. Experts also say residents will be eager to withdraw money from their bank accounts once enough time since euro introduction has passed.

In total, analysts of SEB and FCMC note positive trends and improvements of Latvian households’ financial state.

Office for honest taxpayers

The Latvian government has finally approved a new head for the State Revenue Service (SRS) – Inara Petersone. She has been the acting Director of SRS since July 2013.

According to her, she primarily wants to make sure SRS can offer the best service possible for customers. One of her priorities will be personnel training and communication improvement with customers and non-government sector. Petersone promises to turn SRS into a modern and open authority for honest taxpayers. The new Director of SRS has plenty of new ideas for combating tax avoiders.

For example, according to Petersone, Latvia’s residents owe the state a total of LVL 638.18 million. LVL 503.92 million of this amount is unavailable, because debtors have nothing to give. Firms that have tax debts usually claim to have no actual property, while their owners live a rich life. This is why SRS plans to launch amendments that would allow authorities to take away the property of owners of such “empty” firms to cover tax debts.

Honest taxpayers will enjoy more positive surprises SRS will offer in the near future. For example, it is planned to make the process of declaration submission easier by reducing the amount of necessary information.

The fight for “real and far-reaching” tax rate

The current rate of MET is 9% of a company’s turnover. This makes it attractive for residents engaged in small, family business. In Q1 2013, there were 55,454 persons employed in such firms – 13.3 times more than there were in Q4 2010. As BNN had previously reported, it is planned to raise MET’s rate to 15% in 2015. Saeima deputies have already approved this measures in the first reading.

LCCI has decided to oppose this measure. This organisation invites all entrepreneurs and residents to vote against this measure and support Latvian entrepreneurs. In order to participate in the signature collection campaign, residents should either come to the office (Kr.Valdemara Street 35) or send an e-mail message containing personal data to Signatures will then be submitted to the Saeima with a request to stop the progress of the document.

Economy Minister Daniels Pavluts notes that his institution’s offered changes will only contribute to the creation of new companies and stimulate development. Changes will also provide better social protection of such companies’ employees. “We also need to discuss changes to the micro-enterprises tax system, which would limit the possibility of using tax optimization schemes and reduce general bureaucratic burden for micro-enterprises,” – he added.

Economy Ministry offers to make sure a specific micro-enterprise tax rate can only be used for no more than five years. In order to prevent situations when the same owners create new micro-enterprises with a different name, it is proposed to make sure a five-year restriction also applies to company owners. It is also planned to increase state social insurance will make the bulk of MET as the rate of this tax grows.


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