Over 200 protest against scrapping micro enterprise tax

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On Wednesday over 200 people protested by the Latvian Saeima against the plan to scrap the so-called micro-enterprise tax that provides a lower tax rate to small companies, reported LSM.

Many of the protesters held black balloons or posters, with some chanting "Let us work!", "If there's no micro, there'll be necro".

People will not be able to make new micro enterprises according to the amendments on which the Saeima is voting today, Juris Pūce, leader of the Latvijas attīstībai party and one of the organizers of the protest, told LTV's Rīta Panorāma. 

It was also organized by Handmade in Latvia, a group of people making handicrafts. 

"The current companies, if they want to reorganize or otherwise continue to work, won't be able to do it," said Pūce.

It is planned that starting next year mandatory minimum state social insurance contributions will be introduced at €97/month per employee. 

"For two more years payers of the micro-enterprise tax can work in the current regime, and new ones can register [as payers of the tax] for half a year. And there's an initiative on the part of the government to offer a different solution to replace the micro-enterprise tax, but it won't be rushed," said Finance Minister Dana Reizniece-Ozola.

During the transition period, the social insurance contributions are to be set low for select groups of employees: young people, disabled people, unemployed persons and people who are close to retiring.

The tax for micro enterprises could be reduced from 9% to 5% during the period leading to 2019 when the micro-enterprise business form is planned to be phased out.

The Latvian parliament is on Wednesday deciding on the next year's budget and sets of laws related to it. 

The Finance Ministry said earlier that three new special tax regimes favorable to small businesses will be introduced in the future.

In addition to being favored by small entrepreneurs, the tax is also used in highly imaginative ways, with LTV reporting in May about a major taxi company reorganizing itself into 150 micro enterprises in a bid to pay less in taxes. 

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