Financial Services, Latvia, Legislation, Markets and Companies, Taxation

The amendments are part of the bills accompanying the 2021 state budget bill.

At the moment, the microenterprise tax rate is 15% for annual turnover of up to EUR 40,000. Starting next year, the tax rate will be raised to 25% for turnover of up to EUR 25,000, and 40% for turnover exceeding EUR 25,000.

The amendments also stipulate that, starting 2021, the microenterprise tax will apply to just one person at a company - the company's owner. It will no longer be possible for value added tax payers and limited liability companies to apply for the microenterprise tax payer's status.

As for employees already working at microenterprises, the current taxes provided for in the Microenterprise Tax Law will apply to them until June 30 next year. After that, regular labor taxes will have to be paid for all employees at microenterprises.

According to the amendments, 67% of revenue from microenterprise tax will cover mandatory state social insurance contributions and the other 33% will be considered personal income tax payments.

According to the Finance Ministry's estimates, the amendments will have a positive effect on the state budget, increasing the budget revenue by EUR 21.2 million in 2021, EUR 21.7 million in 2022 and EUR 23.4 million in 2023.

Based on the ministry's data, there were 80,938 microenterprise tax payers in Latvia in 2019.

Saeima will take the final decision on the amendments.