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Latvian president orders parliament to rework bill on microenterprise tax

Xinhua, December 3, 2016 Adjust font size:

Latvian President Raimonds Vejonis on Friday returned to parliament the legislative amendments that would have phased out the reduced microenterprise tax, which is charged on small businesses, by 2019.

As he sent the amendments to the law on microenterprise tax back to lawmakers for revision, the president said that a new regulation that would make doing business for small and lifestyle enterprises easier had to be provided, before abolishing the existing microenterprise tax.

Earlier in the day, the government had reached an agreement with the Latvian Chamber of Commerce and Industry on the bill's postponement.

"The president believes that the proposed regulation is flawed and contradicts earlier promises," Vejonis' representative Janis Siksnis said, noting that in September 2015, the government committed to working out a new support mechanism for Latvia's small enterprises.

The new mechanism, which still has not been provided, was supposed to replace the current microenterprise tax.

"Since such a regulation has not been developed and approved, the president believes that it would not be right to abolish the existing support system for microenterprises," Siksnis said.

After the meeting with representatives of the Latvian Chamber of Commerce and Industry, Prime Minister Maris Kucinskis told reporters that drawing up new proposals on how to tax microenterprises would take at least three months.

The new regulation, he said, should help improve the business environment without hurting small and startup businesses, especially those operating in Latvia's regions. At the same time, it is necessary to make sure that the support system cannot be abused by regular companies seeking to optimize their taxes.

Under the agreement reached between the government and the Latvian Chamber of Commerce and Industry, registration of new microenterprise taxes will end not in mid-2017 as it was planned before, but when the new regulation is in place.

The microenterprise tax itself will also remain in place until the new regulation is adopted.

At present, small enterprises in Latvia are required to pay 9 percent of their turnover in microenterprise tax. Endit