Economics Ministry proposes lower taxes for budding businesses

The Economics Ministry has proposed solutions to support budding enterprises, including setting lower taxes for new businesses and co-funding salaries for high-level employees in startups. 

Lifestyle businesses

The Economics Ministry proposes scrapping taxes for lifestyle businesses with an annual turnover of less than €3,000 and adopting a fixed payment of €150/month for companies with an annual turnover of less than €12,000 and some companies turning over less than €24,000 a year.

This would apply to lifestyle businesses irrespective of their niche.

Startups

The ministry also proposes to make doing business easier for early-stage startup companies.

Under the new plan, startups would pay a fixed tax of €252 a month per each employee, to be paid into the social budget. Startups would be exempt from paying income tax.

The ministry says the rules would apply to companies manufacturing, developing and selling innovative products for the first five years of their operation. Attracting risk-capital investments would be required to qualify for state support.

The state could also help startups hire highly qualified employees through a support program for cases when the employees aren't ready to work for the salaries the company can afford to offer.

"Our goal is to make it so that Latvia becomes the number one choice for startups in the Baltics," said Economics Minister Arvils Ašeradens (Unity).

Budding enterprises

The ministry proposes setting smaller taxes and making income declarations simpler for companies just starting out. 

The new plan would see businesses pay 75% of the social tax and 3% from turnover for the first two years of operation and 100% of the social tax and 3% of turnover starting the third year.

Only companies with an annual turnover of less than €50,000 and employing a workforce of less than six would qualify for paying less in taxes.

While businesses currently paying the micro-enterprise tax would be allowed to continue doing so for two more years.

The aforementioned proposals were supported by a Cabinet of Ministers committee on Thursday and will be further reviewed by the Cabinet of Ministers.

The proposed amendments could apply starting 2018. 

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Economy
Economy