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Wednesday 18.07.2018 | Name days: Rozālija, Roze
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Nearly every fifth Latvian resident neither uses nor plans to use tax return options

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis year’s adopted differentiated non-taxable minimum provides small wage recipients with an option to recover a larger portion of overpaid tax when submitting annual income declaration. But it is residents with low monthly income who are the least informed about the new changes.

61% of respondents said they do not know how these changes could affect their income. Every fifth respondent does not plan to learn more about tax return options, according to results of Swedbank Finance Institute’s recent survey.

Residents with the lowest monthly income in the country also often admit not having enough motivation to understand the process of submitting annual income declarations – 17% of respondents admitted not using tax return options and not having plans to do it in the future. This is why it is a challenge to inform and motivate residents with low income to submit annual income declarations and use the tax return option more actively.

Less than half of Latvia’s residents are informed of the introduction of a differentiated non-taxable minimum and only 14% of them know what kind of effect it will have on their income. Recipients of large wages (above EUR 900) admit more often that they are informed of the theoretical and practical effects changes will have on their income.

«Introduction of a differentiated non-taxable minimum means a gradual transfer to a system when non-taxable amount is no longer applied every month, but once a year. It is expected that next year, when the first monthly wage decrease is felt (by EUR 3.45 for most employees), the majority of sceptics will start looking for options to reduce this effect. Residents with low income are the ones who will feel the negative effect of reduced income the most. The smaller the income, the more important planning and additional sources of income become,» – explains expert of Swedbank Finance Institute Evija Kropa.

«Submission of annual declarations demands a certain degree of discipline – gathering tax documents, filling and submitting declarations in time and knowing the details of the submission process. It also demands austerity and proper planning of expenditures throughout the year,» – adds Kropa.

Swedbank Finance Institute has developed a calculator to help residents assess the influence of non-taxable minimum on their budget. It is available at www.manasfinanses.lv.

Ref: 102.109.109.7986


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