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Saeima’s Budge Committee proposes amending the law to reduce PIT debt formation

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOn Wednesday, 16 May, Saeima’s Budget and Finance Committee decided to submit to the parliament amendments to the Law on Personal Income Tax that were proposed to help reduce the possibility of PIT debt forming due to differentiated non-taxable minimum or the application of a progressive rate on income, as reported by Saeima’s press-service.

The parliament explains that proposed amendments provide an opportunity for taxpayers to make notes about non-application of State Revenue Service’s predicted non-taxable minimum in the Electronic Declaration System if the taxpayer planned larger income. This includes situations when the person has more than one job or is paid royalties. This means the employer would not apply non-taxable minimum to their employee’s wage and there would be no build-up of tax debt for exceeding differentiated non-taxable minimum.

It is also planned to allow the taxpayer the option to make notes in their EDS tax book if their income is to be applied with a 23% PIT rate and not 20% in the event of increased income. Currently SRS does this if the taxpayer submits a written request.

If the tax administration has information that the taxpayer’s income has already exceeded the differentiated non-taxable minimum for the year (currently set at EUR 12,000 a year), SRS will have to inform the income payer that the previously expected non-taxable minimum it not to be applied to the income of the employee in question. SRS will also have to inform the taxpayer, Saeima adds.

«Law amendments offer a solution for situation when taxpayers may have to pay an additional amount in PIT after submitting an income declaration regarding application of differentiated non-taxable minimum or progressive rate on income,» the Saeima notes.

Astra Kaļāne, director of Finance Ministry’s Direct Tax Department, mentioned during the meeting that the situation with PIT debts is particularly topical for people who are paid royalties and people with multiple jobs, as well as pensioners who continue working.

It is planned to allow residents to make notes in their electronic tax book starting from 1 October 2018.

On 16 May, deputies decided to submit the legislative draft to be reviewed during the Saeima’s 24 May meeting and have it approved in the first reading. The final decision is planned to be made on 31 May, as confirmed by Budget and Finance Committee’s chairman Jānis Vucāns.


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