The Saeima on Thursday endorsed draft amendments to the Micro-enterprise Tax Law setting a single 25 percent tax rate for all micro-enterprises.
The government adopted the draft amendments as part of the legislative package related to Latvia’s 2024 budget.
The Finance Ministry drafted the amendments on the basis of the report “On the progress in the development of the National Tax Policy Guidelines for 2024-2027”, which was heard at the government’s meeting on September 26, and the task to submit draft amendments to the Micro-enterprises Tax Law to the government as part of the legislative package accompanying the draft law On the State Budget for 2024 and Budget Framework for 2024, 2025 and 2026.
According to the current Micro-enterprise Tax Law, the micro-enterprise tax rate is 25 percent for enterprises generating up to EUR 25,000 in an annual turnover and 40 percent for enterprises whose annual turnover exceeds EUR 25,000.
According to the data available to the State Revenue Service, in 2022 only 368 (3.7 percent) of all 9843 micro-enterprises had a turnover exceeding EUR 25 000, meaning that they were charged the increased 40 percent tax.
The Finance Ministry argued that the application and administration of the variable tax, which changes depending on a company’s turnover, is complicated and is not conducive to the use of a simplified tax payment solution – the operating revenue account.
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