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Monday 16.07.2018 | Name days: Hermīne, Estere
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Saeima: introduction of micro-enterprises tax has failed

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After reviewing the report regarding the progress of the practical application and results of the micro-company tax, deputies of the Saeima Budget and Finance Commission are encouraging to develop specific proposals to resolve the discovered problems, including the increase of social protection of employees of micro-enterprises.

“We have concluded that the introduction of a new type of business – micro-enterprises – did not give any expected result. Information compiled in the report shows that most companies work with losses or do not declare their turnover and do not pay taxes for their employees. Employees of micro-enterprises are much less socially protected when compared to other employers. There is also a possibility of them forming schemes how to optimize taxes using the micro-enterprises tax regime,” – said the comrade of the Chairman of Budget and Finance Commission Janis Ozolins.

“5% of all workers are employed at micro-enterprises, and most of them receive social guarantees – pensions, benefits – at the expense of other social tax payers. Can this situation threaten the social budget?” – rhetorically asks deputy Elina Silina.

Silina also encouraged reviewing micro-enterprises’ rights to partake in public procurement projects. She stresses that “many micro-enterprises partake in tenders with very low prices, and other market participants are forced to switch to micro-enterprise tax regime in order to exist,” – reports Saeima press service.

Since the beginning of 2011, the number of micro-enterprise tax payers has increased three times – 38 688 enterprises are registered as micro-enterprises. They form 27% of all newly registered tax payers.

The number workers in this time frame in micro-enterprises increased more than ten times, but 75% of their workers still had no stated income. 20.5% of enterprises had not declared their income last year. Up until the middle of 2012, the total tax debt of micro-enterprises reached 1.4 million LVL, informs Welfare ministry’s Social Insurance Department Director Jana Muizniece.

In relation to the opportunity to voluntarily join state social insurance, Muizniece admits that response has not been high, but there are cases when workers of micro-enterprises pay social tax shortly before leaving on a maternity leave.

In order to improve the regulation of micro-enterprises and protect the interests of employers, Welfare Ministry plans to introduce amendments to the law, stating an obligation for micro-enterprise tax payers to warn their workers in writing if the enterprise loses its tax payer status. There is also a number of measures planned to prevent the use of micro-enterprise tax in tax optimization schemes.

Ref: 102.109.109.4995


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  1. J. says:

    ???
    Micro companies are good for the Latvian economy! It gives everyone a chance to start up their own business, employ people and contribute to society, BUT of course it takes time to grow an economy. I even know several foreigners from Scandinavia who moved INTO Latvia to start their business here because of Micro-SIA. OK, maybe they only pay 9% tax on turnover, but expenses are also subject to 21% VAT and dividends add another 10%. Please, please politicians, if you read this, keep the Micro enterprise going for five more years.

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