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Saeima vote on tax reform put off by one week at Unity's request
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    Saeima vote on tax reform put off by one week at Unity's request

    RIGA, July 14 (LETA) - Although Saeima was expected to endorse the government's tax reform bills already next week, now the vote has been postponed until the week after next.

    Yesterday, tax reform bills were forwarded to Saeima committees, they were to be reviewed in the first reading on July 17 and the final reading on July 21.

    However, coalition parties have agreed that the bills will be reviewed in the first reading on July 21 and in the final reading on July 27, as the Finance Ministry's Parliamentary Secretary Edgars Putra (Greens/Farmers) told LETA.

    This has been requested by Unity, as Unity's Saeima group needs more time to acquaint themselves with the tax reform.

    As reported, a number of laws and regulations will be amended as part of the tax reform.

    Personal income tax rates will be differentiated from January 1 next year. 20 percent rate will apply to annual incomes up to EUR 20,000, a 23 percent rate will apply to annual incomes from EUR 20,001 to EUR 55,000, and a 31.4 percent rate to annual incomes of over EUR 55,000.

    Budget revenue from the so-called solidarity tax, which is charged on high salaries, will be used to finance health care and social security. One percentage point of the solidarity tax revenues will be spent on health care financing and six percentage points will be added socially insured persons' pension capital. Also, 10.5 percentage points of the solidarity tax revenues will be paid into the personal income tax account. The remaining part of the solidarity tax revenues will be paid into the pensions special budget.

    Mandatory social insurance contributions will be raised by 1 percentage point starting from next year, and this revenue will be used for financing healthcare sector, according to amendments to the Law on State Social Insurance adopted by the Latvian government today. Therefore mandatory social insurance contributions will amount to 35.09 percent - 24.09 percent paid by employer, and 11 percent paid by employee.

    As of next year, people involved in economic activity and those earning author's fees and royalties will be required to pay 5 percent mandatory social security contributions in order to save up for pensions.

    According to amendments to the Law on Corporate Income Tax, the payment of corporate income tax will be put off until the company's profit is distributed or earmarked for purposes that do not ensure the company's further development. Under the draft law, a 20 percent tax will be charged on dividends at the company level, while no personal income tax will be charged on the dividends paid out to individuals.

    Amendments to the Law on Excise Tax, tax on lead-free petrol will be raised by 7.8 percent – from EUR 436 to EUR 470 per 1,000 liters in 2018. Excise tax on leaded petrol will be raised by 24 percent – from EUR 455.3 to EUR 564 per 1,000 liters. Excise tax on diesel fuel will be raised by 11 percent – from EUR 341 to EUR 378 per 1,000 liters, while excise tax on liquefied petroleum gas will be increased by 12 percent – from EUR 231 to EUR 205 per 1,000 liters.

    Excise tax on cigarettes will be raised by 5.5 percent – from EUR 67 to EUR 70.7 per 1,000 cigarettes. Excise tax on wine will be increased by 18 percent – from EUR 78 to EUR 92 per 100 liters. Excise tax on beer might grow 24 percent – from EUR 4.5 to EUR 5.6 per percentage of absolute alcohol by volume.

    As of next year, the microenterprise tax rate will be set at 15 percent and the annual turnover of microenterprises will be limited to EUR 40,000, according to amendments to the Microenterprise Tax Law the government approved yesterday.

    The caps on the maximum pay for microenterprises' employees would be increased to EUR 900 a month from EUR 750 a month.

    • Published: 14.07.2017 13:03
    • Alina Lastovska, LETA
    •  
    • © The given news may not be republished in any way or amount, or otherwise used by the mass media or Internet websites, without written permission of LETA. If this provision is not observed, the matter will be taken to court pursuant to the laws and regulations of the Republic of Latvia.
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