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Social tax
The social tax rate will increase by 1% (0.5% for each - employee and employer) totaling 35.09%. Therefore an employer will have to pay 24.09%, but employee - 11%.
Value added tax
The reform includes changes to aspects of the VAT regime including a reduction in the VAT registration threshold of EUR 50 000 to EUR 40 000.
The list of sectors with the reverse VAT payment procedure will be expanded. The VAT reverse charge will be applied to a broader range of supplies, including game consoles, household appliances, construction materials and metal products.
Micro-enterprise tax
Amendments to the micro-enterprise tax payment regime is provided for maintaining a unified tax rate of 15% for turnover for all micro-enterprises.
Maximum turnover is planned to be reduced from the current EUR 100,000 to EUR 40,000. Changes also state that from January 1, 2019 onward, the employees of micro company will be allowed to work in only one such company.
Excise tax
With the amendments to the Excise Tax Law is intended to compensate losses from the tax reform’s realization.
The reform will affect fuel, cigarettes and alcohol excise tax rates. Fuel excise tax rates will be from 7.8% to 24% (depending on fuel type). The alcohol excise tax rates will be from 15% to 24%, and for the cigarettes excise tax rate will be 5.5%.
On taxes and duties
The amendments to the Law on Taxes and Duties state that credit institutions will have to provide Tax authority of Latvia with information about their clients, namely individual tax payers, on an annual basis where debit or credit turnover exceeds EUR 15,000 in the previous year.
Royalties
Also amendments provide an obligation to perform mandatory payments from royalties. Recipients of royalties will have to perform 5% payments from royalties to insure their pension.
Minimum wage
Minimum wage in Latvia will be increased to EUR 430 instead of EUR 380.
Taking into account all the above mentioned, there is important work to do in future when implementing the changes into the system.
To find out more about Tax reform in Latvia, Lithuania or Estonia contact our Latvian tax attorney Valters Gencs at valters.gencs@gencs.eu
T: +37167240090
F: +37167240091