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Amendments made to the Micro-company Tax law in Latvia (part 1)

20 October 2016
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Amendments were made to the Micro-company tax law in Latvia that introduced the time limitation on micro-company registration and abolished the limitations to fields that can ease the tax burden in Latvia.

 

On September 2016 new amendments were made to the Micro-enterprise Tax law in Latvia (Micro-company tax law). It has to be noted that these amendments still have to be accepted by the Parliament of the Republic of Latvia.

Micro-enterprise Tax in Latvia, Micro-company tax in Latvia, Micro-company in Latvia, Social tax in Latvia, Personal Income tax in Latvia, Corporate Income tax in LatviaMicro-companies in Latvia can be registered only until year 2017

These amendments determine that from now on the company can be registered as a micro-company tax payer only until the June 30, 2017. Companies that already are operating today from the beginning of 2017 may no longer apply for the micro-company tax payers’ status.

Micro-enterprise Tax in Latvia, Micro-company tax in Latvia, Micro-company in Latvia, Social tax in Latvia, Personal Income tax in Latvia, Corporate Income tax in LatviaNo limitations to fields that can ease the tax burden in Latvia

Amendments also abolished the limitations to the fields in which a person is entitled to be a micro-company tax payer. Therefore, from now on companies can operate in any of the fields in order to be entitled to easing the tax burdens for start-up and small companies.

Micro-enterprise Tax in Latvia, Micro-company tax in Latvia, Micro-company in Latvia, Social tax in Latvia, Personal Income tax in Latvia, Corporate Income tax in LatviaExisting micro-companies in Latvia have to re-register until 2018

According to these amendments the companies that are registered as micro-company tax payers will have to re-register in one of the existing tax payer regimes until the December 15, 2018 if they intend to continue the operation. In case of not re-registering, the micro-company tax payer will automatically be switched to the personal income tax payer or corporate tax payer.

Until now the existing system determines that:

  • Micro business company tax rate in 2016 is 9% (in case the turnover does not exceed EUR 7`000 per year). 9% of tax includes – corporate income tax, social tax, and personal income tax.
  • The tax rate for turnover from 7`000-100`000 euro for the first, second and third tax year (from the moment of receiving the status of micro enterprise tax payer) is 9%, but starting from forth taxation year – 12%.
  • In case turnover exceeds 100 000 euro, the excess is subject of 20 % tax.

Micro-enterprise Tax in Latvia, Micro-company tax in Latvia, Micro-company in Latvia, Social tax in Latvia, Personal Income tax in Latvia, Corporate Income tax in LatviaMicro-companies in Latvia will have to pay minimal state social tax

Starting from the next year the micro-company tax payers will be obliged to pay a minimal state social tax for each employee. The minimal state social insurance payments will be 75% from the minimal wage – meaning that the company will have to pay EUR 1166 a year if the minimal wage will be EUR 380.

According to the data of January 2016 of Ministry of Welfare of the Republic of Latvia there were registered 47,2 thousand micro-company tax payers in Latvia. New amendments are approved by the government, but still have to be accepted by the Parliament of the Republic of Latvia.

 

Should you have any questions about amendments made to the Micro-company Tax law in Latvia, please do not hesitate to contact our English speaking lawyers info@gencs.eu.

 

T: +371 67 24 00 90

F: +371 67 24 00 91

 

www.lavvocato.eu

www.attorneys-at-law.eu

www.baltic-lawfirm.eu

For questions, please, contact Valters Gencs, attorney at law at info@gencs.eu


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The material contained here is not to be construed as legal advice or opinion.

© Gencs Valters Law Firm, 2016
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