Micro-Enterprise Tax as Means of Promoting Entrepreneurship in Latvia

Leibus, Inguna

doi:10.15544/ssaf.2012.16

Cited by 2 publications

(2 citation statements)

References 2 publications

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“…The State Revenue Service (SRS) data demonstrate that in Latvia the number of entirely small taxpayers -natural entities increases more rapidly (by 10.4% in 2012/2011 and 10.3% in 2013/2012) simultaneously with the decrease of the share of legal entities (-2.8% and -2.4% respectively). The calculations using the public data of the SRS show that on 31 August 2012 legal entities (65.5%), mainly limited liability companies (Ltd), accounted for the majority of MET payers (Leibus, 2012). No respective statistics is available for the year 2013; though, the considerations of the general changes in the structure of taxpayers could allow concluding that the share of MET payers -legal entities slightly declines too.…”

Section: Micro-enterprise Tax Application Resultsmentioning

confidence: 99%

“…The results achieved within the first years after the introduction of the MET in Latvia outlined that tax calculations and tax accounting were simplified for microenterprises, and sometimes it allowed reducing the tax burden for small companies (Leibus, 2012). Nevertheless, the application of the MET has caused problems already from the tax introduction in cases which contradict the tax introduction aim -to support the establishment of new enterprises.…”

Section: Introductionmentioning

confidence: 99%

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Problematic Aspects of Micro-Enterprise Tax in Latvia

Leibus

2014

Economics and Rural Development

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The number of micro-enterprises, especially in the sphere of individual services, choosing to be the micro-enterprise taxpayers has increased since the introduction of the micro-enterprise tax in 2010. The share of micro-enterprise tax (MET) revenues in the state budget outlines an annual growing tendency. The MET plays an essential role in the improvement of the business environment in Latvia and in the increase of economic activities in rural regions. However, this tax due to the gaps of legislation is still applied not only by new entrepreneurs but also by the existing companies to reduce significantly the tax burden, thus, creating an unequal tax competition with other companies paying taxes consistent with the general procedure. The practical application of the MET highlights two main problems: 1) unfair tax competition among companies which is based on the fact that the dividend amount of capital companies is not limited in the micro-enterprises, and hence, these companies may considerably reduce the tax burden; 2) the establishment of a micro-enterprise only to reduce the labour costs would lead to the reduction of the amount of social insurance paid for employees and consequently to the reduction of the social security in the future. The research aim is to assess the former results related with the introduction of the MET and to provide solutions for the prevention of problematic aspects.The research results outline the necessity for the amendments in the Micro-enterprise Tax Law which would prescribe the maximum amount of dividends for the owners of capital companies -MET payers. Whereas, the MET rate should be related with the share of labour costs in the micro-enterprise to increase the amount of the state social insurance paid for the employees of micro-enterprises. It is recommended to increase the tax rate up to 12% if the share of labour costs exceeds 40% and to apply a 15% tax rate if the share of labour costs exceeds 60%. This would ensure the state social insurance object for the employees of micro-enterprises which is close to the state determined minimum salary. It is not recommended to increase the MET rate for other micro-enterprises where the share of labour costs does not exceed 40%, since this would reduce the competitiveness of these micro-enterprises.

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Section: Micro-enterprise Tax Application Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Problematic Aspects of Micro-Enterprise Tax in Latvia

Leibus

2014

Economics and Rural Development

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Obciążenia fiskalne pracy mikroprzedsiębiorstw w Polsce

Rosiński

2019

pefim

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The purpose of the article is to present and analyze the fiscal burdens on labor of micro-enterprises in Poland with the separation of the burdens of a natural person running a business under the so-called self-employment and burdens paid by the entrepreneur for employees. The article presents also the fiscal conditions of conducting business activity based on data from the Doing Business 2018 report prepared by the World Bank Group. The basic issue of the scope of fiscal burdens on labor is quasi-tax burden, expressed in compulsory social security and health insurance contributions, which is one of the major barriers to microenterprises in the conduct and development of business. In recent years, Poland has achieved a significant improvement in terms of time devoted to tax settlements.

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Micro-Enterprise Tax as Means of Promoting Entrepreneurship in Latvia

Cited by 2 publications

References 2 publications

Problematic Aspects of Micro-Enterprise Tax in Latvia

Problematic Aspects of Micro-Enterprise Tax in Latvia

Obciążenia fiskalne pracy mikroprzedsiębiorstw w Polsce

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