Latvian government coalition gives nod to sweeping tax reforms

The sweeping tax reforms proposed by the Latvian Finance Ministry have been approved in principle by the Baltic country's government coalition, Latvian Prime Minister Maris Kucinskis told reporters following a meeting of coalition partners on Tuesday.

The prime minister said debates on the tax proposals will continue, but the partners will push ahead with the reform.

Latvian Finance Minister Dana Reizniece-Ozola predicted that the reform plan was likely to win the government's support as well.

Kucinskis, who represents the leading coalition partner, the Greens and Farmers Union, will be holding meetings with the two other partners of Latvia's tripartite center-right coalition, the right-wing National Alliance and the center-right Unity, this week to secure their full support for the tax reform.

The prime minister noted, however, that the most hotly disputed proposal to allocate 1 percent of social security contributions to the health sector would not be included in the reform plan.

The government is scheduled to decide on the tax reform on May 3.

Earlier this month, the Finance Ministry sent the blueprint of the national tax policy framework 2018-2021 to all line ministries, as well as social and other partners in the hope that the government might decide on its adoption at an extraordinary meeting scheduled for April 28. The delay has occurred because of Unity's objections to some of the proposed tax measures.

The main tax reforms proposed by the Finance Ministry include setting a zero-tax rate on companies' undistributed profit and a 20 percent tax rate on distributed profit, cutting the personal income tax rate from 23 percent to 20 percent, scrapping solidarity tax which is charged on high salaries, leaving a reduced tax on microenterprises in place, and raising the minimum monthly wage to 430 euros from 380 euros. Endit