Number of "microenterprises" has shrunk by 5,000 in first half of 2018

The number of businesses working under the "microenterprise" tax scheme has decreased by about 5,000 in the first half of 2018, reports Latvian Radio.

In Q4 last year, 40,300 companies operating under this tax regime were operational in Latvia, against 35,000 in the first half of 2018.

Nevertheless it is not known if these companies chose another business model or stopped operations altogether.

The microenterprise tax system is in place for companies just starting out, and they pay fewer taxes.

There are a number of limitations for such companies, including a maximum wage of €720 a month. The scheme has been inventively used for tax optimization, including by major Taxi companies

Starting January 1, 2018 the maximum turnover for microenterprise companies was reduced from the previous €100,000 to €40,000 a year.

Nevertheless, Dace Pelēkā, the acting head of the State Revenue Service said that the tax regime is still used to optimize taxes.

"There are quite many [microenterprise] businesses that are set up and operational with the express purpose of optimizing taxes," she told Latvian Radio. 

Microenterprise employees don't pay labor taxes (only the companies do), and therefore many people working in these companies -- there are about 50,000 people who only work at microenterprise companies -- may lose health insurance starting 2019. 

Related articles
0 comments
Comment
Comment using your social media profile
Business
Economy