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LEGAL ACTS OF THE REPUBLIC OF LATVIA
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The translation of this document is outdated.
Translation validity: 01.01.2018.–14.08.2019.
Amendments not included: 23.05.2019.

Text consolidated by Valsts valodas centrs (State Language Centre) with amending laws of:

15 December 2011 [shall come into force from 1 January 2012];
19 September 2013 [shall come into force from 1 January 2014];
6 November 2013 [shall come into force from 1 January 2014];
19 March 2015 [shall come into force from 26 March 2015];
23 April 2015 [shall come into force from 13 May 2015];
30 November 2015 [shall come into force from 1 January 2016];
20 December 2016 [shall come into force from 1 January 2017];
28 July 2017 [shall come into force from 1 January 2018].

If a whole or part of a section has been amended, the date of the amending law appears in square brackets at the end of the section. If a whole section, paragraph or clause has been deleted, the date of the deletion appears in square brackets beside the deleted section, paragraph or clause.

The Saeima1 has adopted and
the President has proclaimed the following Law:

Micro-enterprise Tax Law

Section 1. Terms Used in this Law

The following terms are used in this Law:

1) micro-enterprise - an individual merchant, an individual undertaking, a farm or fishing enterprise, as well as a natural person registered as a performer of economic activity at the State Revenue Service, or a limited liability company, if they conform to all of the following criteria referred to in this Clause:

a) the participants (if any) are natural persons,

b) the turnover does not exceed EUR 40 000 within a calendar year,

c) the number of employees does not exceed five at any time. An employee who is absent during employment relationship (including on study leave without retaining work remuneration, on maternity leave, parental leave, leave for the father of the child, adopters or another person who actually takes care of the child, as well as on leave without retaining work remuneration, or receiving sickness benefit) and who does not receive income from the micro-enterprise for the period of time, as well as employees suspended from work shall not be included in the number of employees,

d) members of the board of directors of a limited liability company may only be employees of the micro-enterprise,

e) the natural or legal person referred to in this Clause is not a member of a partnership;

2) micro-enterprise owner - a participant of a limited liability company conforming to the criteria of the micro-enterprise, an owner of an individual undertaking, farm or fishing enterprise, an individual merchant or another natural person registered as a performer of economic activity at the State Revenue Service;

3) micro-enterprise employee - a natural person employed by a micro-enterprise on the basis of an employment contract and the micro-enterprise owner, as well as a procuration holder;

4) micro-enterprise tax - a tax, which includes:

a) State social insurance mandatory contributions, personal income tax and State fee of the business risk for micro-enterprise employees,

b) enterprise income tax, if the micro-enterprise conforms to the features of the enterprise income taxpayer,

c) personal income tax of the micro-enterprise owner for the part of the micro-enterprise revenue from the economic activity;

5) turnover - revenue from the economic activity of the micro-enterprise;

6) [15 December 2011].

[15 December 2011; 19 September 2013; 6 November 2013; 30 November 2015; 20 December 2016; 28 July 2017]

Section 1.1 Purpose of this Law

The purpose of the Law is to reduce administrative and tax burden for micro-enterprises, especially in the period of commencement of economic activity, and also in the sectors with a low income level potential by concurrently complying with common interests of the public in the field of fair competition and social security.

[23 April 2015]

Section 2. Right of Micro-enterprises to Opt for Payment of the Micro-enterprise Tax

(1) A micro-enterprise is entitled to opt for payment of the micro-enterprise tax, if the restrictions laid down in this Law have been observed.

(11) [20 December 2016]

(12) [20 December 2016]

(2) If a natural person is a participant in several limited liability companies, only one of these companies has the right to opt for payment of the micro-enterprise tax.

(3) If a natural person is a participant in a limited liability company and the owner of a farm or fishing enterprise or an individual merchant, or a performer of economic activity registered at the State Revenue Service, micro-enterprise taxpayer has the right to opt for payment of the micro-enterprise tax only for one of these forms of economic activity.

(4) A micro-enterprise is entitled to opt for payment of the micro-enterprise tax, if the income of a micro-enterprise employee from the taxpaying micro-enterprise does not exceed EUR 720 per month.

(5) A micro-enterprise is entitled to acquire the status of a micro-enterprise taxpayer, if it has reached a written agreement with all the employees of the micro-enterprise regarding application of the micro-enterprise tax. Such agreement may be included as a separate provision in the employment contract.

(6) A micro-enterprise taxpayer who has discontinued economic activity and paying of the micro-enterprise tax in the taxation period may not repeatedly select to pay the micro-enterprise tax in the same taxation period and in post-taxation period.

(7) A micro-enterprise which has selected to pay the micro-enterprise tax may not concurrently pay the personal income tax or patent fee for the income from economic activity.

(8) Provision of Paragraph seven of this Section shall not apply to a micro-enterprise taxpayer who determines the income from economic activity in accordance with Section 11, Paragraph twelve of the law On Personal Income Tax.

[15 December 2011; 19 September 2013; 6 November 2013; 23 April 2015; 20 December 2016]

Section 2.1 Income of a Micro-enterprise Employee from a Micro-enterprise

(1) For the application of this Law the following shall be considered income of a micro-enterprise employee from a micro-enterprise:

1) in relation to the micro-enterprise owner - the income which is the funds withdrawn from the micro-enterprise for personal consumption in each month of the relevant quarter and other income obtained from the micro-enterprise in the form of money, services or another form, except dividends;

2) in relation to the micro-enterprise employee who is employed on the basis of an employment contract - the income which is the work remuneration calculated each month of the relevant quarter on the basis of the current or former employment relationship and the payments that are not directly related to work remuneration or benefits directly or indirectly obtained by the employee in money or in other items from the employer for work in the micro-enterprise, unless laid down otherwise in this Law;

3) in relation to the micro-enterprise owner with whom the micro-enterprise has entered into an employment contract - the amount of income specified in Clauses 1 and 2 of this Paragraph.

(2) The income of a micro-enterprise employee referred to in Paragraph one of this Section from the micro-enterprise shall not include:

1) the benefit from the use of a car belonging to the micro-enterprise or at the disposal thereof for such tasks or needs, which are not related to the performance of work duties or economic activity in the micro-enterprise, if the company car tax is paid for the car in the month of obtaining the benefit;

2) the funeral benefit granted by the employer in case of death of the employee of the micro-enterprise or his or her spouse or kin (kinship up to the third degree within the meaning of The Civil Law), the value of which does not exceed EUR 213.43;

3) the compensation for official travel and work travel expenses to the employee in accordance with laws and regulations that provide for the amount of compensation for expenses arising as a result of official travels or work travels;

4) the compensation which is disbursed by the employer to the employee for depreciation of the personal vehicle of the employee (which is used for work needs according to the employment contract) and which is determined in the amount of EUR 0.04 for each kilometre driven, but not more than EUR 57 per month;

5) other compensations, which are disbursed by the employer in accordance with the Labour Law and which are justified with documents certifying expenses.

(3) The following expenses of a micro-enterprise shall not be applied to the income of a micro-enterprise employee from the micro-enterprise referred to in Paragraph one of this Section and personalised as the income of a micro-enterprise employee:

1) which are necessary for fulfilling the labour protection requirements laid down in the Labour Protection Law;

2) for training of the employee in order to acquire, improve or expand the skills and knowledge necessary in work, profession, position or occupation.

(4) If the micro-enterprise has issued a loan to an employee, which in accordance with the law On Personal Income Tax is a loan to be considered as equivalent to income, it shall not be part of the income of the micro-enterprise employee from the micro-enterprise and shall be taxable with the personal income tax in accordance with the law On Personal Income Tax.

(5) If the total amount of loans issued by the micro-enterprise for one natural person exceeds EUR 15 000, the micro-enterprise shall provide information to the State Revenue Service, in accordance with the procedures laid down in the law On Personal Income Tax, regarding the loan contracts entered into with such natural person and the total amount of loans.

(6) Also cash or non-cash advance payment issued to a micro-enterprise employee or micro-enterprise owner from the micro-enterprise shall be applied to the income of the micro-enterprise employee or micro-enterprise owner referred to in Paragraph one of this Section, if settlement of accounts for it or its part is not performed within 90 days after the end of the official travel or work travel, but in other cases - within 90 days from day of issuing the cash or non-cash advance payment.

(7) The time period of 90 days referred to in Paragraph six of this Section shall be counted from the following day after the end of the official travel or work travel or after the day of issuing the cash or non-cash advance payment.

(8) The provisions referred to in Paragraph six of this Section shall not be applied, if the total remaining amount of cash or non-cash advance payments, which is at the disposal of the recipient of the advance payment, does not exceed the amount of the minimum monthly wage specified in the State.

[15 December 2011; 19 September 2013; 6 November 2013 / Paragraphs six, seven and eight shall come into force on 1 July 2014. See Paragraph 5 of Transitional Provisions]

Section 2.2 Employment of an Employee at a Micro-enterprise

(1) A natural person may be simultaneously employed as an employee of a micro-enterprise only at one micro-enterprise.

(2) Upon concluding an employment contract, a micro-enterprise taxpayer shall receive a written certification from the applicant that he or she is not employed by another micro-enterprise taxpayer.

(3) The State Revenue Service shall not register an employee of a micro-enterprise as an employee at a micro-enterprise, if he or she is employed at another micro-enterprise.

[28 July 2017 / See Paragraphs 27 and 28 of Transitional Provisions]

Section 3. Obligation of a Micro-enterprise Taxpayer to Inform Employees

(1) Upon entering into an employment contract, a micro-enterprise taxpayer shall inform an applicant in writing that the employer is the micro-enterprise taxpayer, that the personal income tax and State social insurance mandatory contributions of the micro-enterprise employee are determined from the turnover of the micro-enterprise and that the micro-enterprise employee has the right to voluntarily join the State social insurance. This information shall be included in the employment contract.

(2) A micro-enterprise, which would like to become a micro-enterprise taxpayer commencing with the next taxation period, shall inform employees in writing that the personal income tax and State social insurance mandatory contributions of the employee of the micro-enterprise paying the micro-enterprise tax are determined from the turnover of the micro-enterprise and that the micro-enterprise employee has the right to voluntarily join the State social insurance.

(3) A micro-enterprise taxpayer shall, not later than a month prior to the end of the taxation period, warn a micro-enterprise employee in writing that beginning with the following taxation period the employer prior to disbursing the income from paid work will deduct tax from his or her wage in accordance with the procedures laid down in the law On Personal Income Tax and will make State social insurance mandatory contributions in accordance with the general procedures laid down for an employee and employer in the law On State Social Insurance, if the micro-enterprise taxpayer:

1) is anticipating that micro-enterprise taxpayer will not fulfil any of the conditions of Section 1, Clause 1 or Section 2, Paragraph four of this Law in the taxation period;

2) with the following taxation period will lose the status of a micro-enterprise taxpayer due to another reason.

[20 December 2016; 28 July 2017 / See Paragraph 29 of Transitional Provisions]

Section 4. Registration of the Micro-enterprise Taxpayer

(1) A person has the right to apply for the acquisition of the status of the micro-enterprise taxpayer concurrently with a submission regarding entering of the individual merchant, individual undertaking, farm or fishing enterprise or limited liability company in the relevant register of the Enterprise register, confirming that in the reporting year, which conforms to the taxation period of the micro-enterprise tax:

1) the foreseeable number of the micro-enterprise employees will not exceed five employees and the employees will be informed in accordance with the requirements of Section 3 of this Law;

2) the expected turnover will be up to EUR 40 000;

3) the micro-enterprise would like to pay the micro-enterprise tax;

4) [20 December 2016].

(2) The Enterprise Register shall send electronically the information regarding the application received for the acquisition of the status of the micro-enterprise taxpayer to the State Revenue Service within one working day after registration of the subjects referred to in Paragraph one of this Section.

(3) A natural person who, upon commencement of economic activity, registers as a performer of economic activity at the State Revenue Service and opts to be a micro-enterprise taxpayer, shall, concurrently with the registration application, submit an application, in which the information referred to in Paragraph one of this Section is indicated.

(4) A micro-enterprise which would like to acquire the status of a micro-enterprise taxpayer shall submit an application to the State Revenue Service by 15 December of the pre-taxation year, where conformity of the taxpayer is confirmed with the criteria specified in Section 1, Clause 1, Sub-clause "a" (if the micro-enterprise is a limited liability company) and Section 2 of this Law, as well as with the conditions referred to in Paragraph one of this Section in relation to the next taxation period.

(5) Within five working days after receipt of an application regarding acquisition of the status of the micro-enterprise taxpayer or after receipt of the information referred to in Paragraph two of this Section from the Enterprise Register, the State Revenue Service shall take a decision to register the micro-enterprise as the micro-enterprise taxpayer or a decision to refuse registration, if the State Revenue Service has information at its disposal that the applicant does not conform to the criteria and restrictions for a micro-enterprise laid down in this Law and, therefore, the status of the micro-enterprise taxpayer cannot be granted.

(6) If the State Revenue Service takes a decision to refuse to register a micro-enterprise as the micro-enterprise taxpayer, such decision shall be sent to the taxpayer within a day after taking thereof. If the State Revenue Service takes a decision to register a micro-enterprise as the micro-enterprise taxpayer, then the status of the micro-enterprise taxpayer shall be applied to the newly established micro-enterprise from the day when the State Revenue Service received an application regarding acquisition of the status of the micro-enterprise taxpayer or from the day when the newly established micro-enterprise was registered in the Enterprise Register.

(7) In conformity with the laid down in Paragraph four of this Section, a micro-enterprise, may become a micro-enterprise taxpayer from 1 January of the next taxation period. The micro-enterprise taxpayer is entitled to change the selected status of the micro-enterprise taxpayer and become a personal income taxpayer or an enterprise income taxpayer accordingly not sooner than before the end of the relevant taxation period.

(8) If a micro-enterprise taxpayer fails to fulfil any of the conditions of Section 1, Clause 1 or Section 2, Paragraph two, three or four, or Section 2.2 of this Law, it shall lose the status of the micro-enterprise taxpayer beginning with the next taxation period.

(81) If a micro-enterprise taxpayer does not have turnover in the taxation period, it shall lose the status of a micro-enterprise taxpayer in the post-taxation period. This condition shall not be applied, if the micro-enterprise taxpayer is registered as a micro-enterprise taxpayer after the first quarter of the taxation period.

(82) If a micro-enterprise is registered as a micro-enterprise taxpayer starting from the second quarter of the pre-taxation period and it does not have turnover in the pre-taxation period and taxation period, it shall lose the status of a micro-enterprise taxpayer with the post-taxation period.

(83) If a micro-enterprise taxpayer has applied Section 6, Paragraph 2.1 or 3.1 of this Law, the micro-enterprise may repeatedly choose to pay the micro-enterprise tax not earlier than after five years.

(84) If a micro-enterprise taxpayer updates any of micro-enterprise tax quarter declarations of previous periods in the taxation period or submits a micro-enterprise tax declaration with delay and it is detected that in any of quarters in the previous taxation period, for which updates are being made or micro-enterprise tax declaration is being submitted with delay, the condition of Section 1, Clause 1, Sub-clause "b" or "c" or Section 2, Paragraph four of this Law is not fulfilled, the micro-enterprise taxpayer shall lose the status of a micro-enterprise taxpayer from the post-taxation period.

(9) A micro-enterprise shall register each employee of the micro-enterprise at the State Revenue Service as a person to be mandatorily socially insured in accordance with the time period and procedures stipulated by the Cabinet.

[15 December 2011; 19 September 2013; 6 November 2013; 23 April 2015; 20 December 2016; 28 July 2017]

Section 5. Taxation Period of the Micro-enterprise Taxpayer, Object Taxable with the Micro-enterprise Tax and Calculation of the Micro-enterprise Tax

(1) The taxation period of a micro-enterprise taxpayer shall be a calendar year.

(2) The micro-enterprise tax shall be applied to the turnover of the taxation period of the micro-enterprise.

(3) The micro-enterprise tax shall be calculated, multiplying the turnover of the taxation period of the micro-enterprise by the micro-enterprise tax rate specified in Section 6 of this Law.

(4) If the income of an employee of the micro-enterprise paying the micro-enterprise tax exceeds the limit specified in Section 2, Paragraph four of this Law, the tax shall also be applied to the part of the income earned by the micro-enterprise employee from the micro-enterprise which exceeds EUR 720 per month, applying an elevated micro-enterprise tax rate.

[19 September 2013]

Section 6. Micro-enterprise Tax Rate

(1) A micro-enterprise tax rate shall be 15 per cent.

(2) If the number of employees of a micro-enterprise paying the micro-enterprise tax exceeds five employees in a quarter or the conditions of Section 2.2 of this Law are not complied with, two percentage points shall be added to the rate specified in Paragraph one of this Section for each additionally employed employee or an employee who is employed at multiple micro-enterprises. If the number of employees of a micro-enterprise varies during a quarter, the micro-enterprise tax rate shall be determined according to the largest number of employees in the relevant quarter, taking into account such employees who have worked for not less than half of the relevant quarter.

(21) A micro-enterprise taxpayer is entitled not to apply Paragraph two of this Section, if the number of micro-enterprise employees in a taxation year exceeds five and the number of micro-enterprise employees in a taxation year in comparison to the pre-taxation year and in the pre-taxation year in comparison to the year, which is before the pre-taxation year, has increased by one or two employees. If the number of micro-enterprise employees in a year varies, the number of micro-enterprise employees in the relevant year shall be determined, taking into account such employees who have worked less than half of the calendar year.

(3) The micro-enterprise tax rate for the exceeded part of the turnover specified in Section 1, Clause 1, Sub-clause "b" of this Law shall be 20 per cent.

(31) A micro-enterprise taxpayer is entitled not to apply Paragraph three of this Section, if the turnover of a taxation year has increased in comparison to the turnover of the pre-taxation year or the turnover of such year, which is before the pre-taxation year, however, the increase in the turnover of the taxation year in comparison to the turnover of the pre-taxation year or the turnover of such year, which is before the pre-taxation year, does not exceed 30 per cent.

(32) If a micro-enterprise taxpayer has applied Paragraph 2.1 or 3.1 of this Section for the reporting quarter of the taxation year because micro-enterprise taxpayer is anticipating that the restriction determined in the taxation year will not be exceeded, micro-enterprise taxpayer shall not apply the rate laid down in Paragraphs two and three of this Section. If the restrictions laid down in Paragraph 2.1 or 3.1 of this Section are exceeded in any of the following reporting quarters of the taxation year, the micro-enterprise taxpayer shall apply the rate laid down in Paragraph two or three of this Section accordingly for the following quarter of the taxation period, as well as shall update the previous reporting quarter declarations of the taxation year, applying the rate laid down in Paragraphs two and three of this Section.

(4) If the income of a micro-enterprise employee exceeds the limit specified in Section 2, Paragraph four of this Law, an increased rate of the referred to tax in the amount of 20 per cent from the taxable object referred to in Section 5, Paragraph four of this Law shall be applied in addition to the micro-enterprise tax rate specified in Paragraph one of this Section. If the income of a micro-enterprise employee from the micro-enterprise paying the micro-enterprise tax exceeds EUR 720 due to the severance pay laid down in the Labour Law or because he or she has been disbursed compensation for unused leave, in case of terminating employment legal relationship and employment legal relationship with such person is not renewed within six months after termination thereof, as well as because the amount to be disbursed to the employee for the annual paid period of leave has been calculated in accordance with the norms of the Labour Law, the criterion of the amount of the income of a micro-enterprise employee is not deemed exceeded and the tax rate laid down in this Paragraph needs not be applied.

(5) A micro-enterprise taxpayer shall, not later than within 15 days after the day of submitting the declaration laid down in this Law regarding the last quarter of the taxation year, pay the micro-enterprise tax into the budget in amount of EUR 50, if the micro-enterprise did not have turnover in the taxation period (calendar year) or the calculated amount of the micro-enterprise tax does not exceed EUR 50.

(6) A micro-enterprise taxpayer shall not apply Paragraph five of this Section for the taxation year in which registration of economic activity (commercial activity) was performed and for the year when economic activity was terminated or liquidation proceedings were completed.

(61) Paragraph five of this Section shall not be applied to a micro-enterprise taxpayer proportionally for those calendar days of the taxation year on which he or she takes care of the child up to two years of age, and also for the calendar days of temporary incapacity, prenatal and maternity leave for which a sick-leave certificate "B" is issued to the payer.

(7) If, in updating a micro-enterprise tax declaration of the previous taxation period, the restriction referred to in Section 1, Clause 1, Sub-clause "b" or "c" or Section 2, Paragraph four of this Law is exceeded:

1) in the taxation period, in which any of the abovementioned restrictions is exceeded after updating the micro-enterprise tax declaration, the micro-enterprise tax rate determined for the relevant exceedance in Section 6, Paragraph two, three or four of this Law is applicable;

2) in subsequent taxation periods, in which the micro-enterprise taxpayer has unjustifiably used the status of a micro-enterprise taxpayer, the micro-enterprise tax rate for the turnover of the relevant taxation period shall be 20 per cent.

(8) If a micro-enterprise taxpayer submits a micro-enterprise tax quarter declaration regarding any of the previous taxation periods with delay and it is detected that in any of the quarters of the previous taxation periods the restriction referred to in Section 1, Clause 1, Sub-clause "b" or "c" or Section 2, Paragraph four of this Law is exceeded and the micro-enterprise taxpayer has unjustifiably retained the status of a micro-enterprise taxpayer, the micro-enterprise taxpayer shall apply the micro-enterprise tax rate laid down in Paragraph seven, Clause 1 of this Section in the taxation period, in which any of the abovementioned restrictions was exceeded, but in subsequent taxation periods - the micro-enterprise tax rate laid down in Paragraph seven, Clause 2 of this Section.

[20 December 2016; 28 July 2017 / See Paragraph 26 of Transitional Provisions]

Section 7. Declaration and Payment of the Micro-enterprise Tax

(1) A micro-enterprise shall pay the micro-enterprise tax for the turnover of a taxation period four times a year for the turnover of each quarter.

(2) A micro-enterprise shall submit a quarterly micro-enterprise tax declaration to the State Revenue Service by the fifteenth date of the month following the quarter.

(21) [20 December 2016]

(3) A micro-enterprise shall pay the micro-enterprise tax in the State budget revenue accounts indicated on the home page of the State Revenue Service in the Internet by the fifteenth date of the month following the quarter.

(4) The Cabinet shall determine the sample form of the micro-enterprise tax declaration and the procedures for filling in thereof.

(5) A micro-enterprise has the right to update the micro-enterprise tax declaration for a reporting quarter no more than twice within a month after the day laid down in Paragraph two of this Section.

(6) After the end of the time period laid down in Paragraph five of this Section a micro-enterprise has the right to submit only such updates of the micro-enterprise tax declaration which do not change or increase the amount of the tax to be paid. The conditions of Section 9, Paragraph two of this Law shall not be applied to the sum of the micro-enterprise tax, which the micro-enterprise pays additionally in the budget in such case.

[23 April 2015; 30 November 2015; 20 December 2016; 20 December 2016]

Section 8. Procedures for Division of the Micro-enterprise Tax

(1) The Treasury shall divide the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a limited liability company, individual undertaking or farm or fishing enterprise, which paid the enterprise income tax from the income earned as a result of economic activity in the previous taxation period as follows:

1) 0.1 per cent shall be transferred into the account for the State fee of the business risk;

2) 80.0 per cent - into the account of the State social insurance mandatory contributions;

3) 18.8 per cent - into the account of the personal income tax;

4) 1.1 per cent - into the account of the enterprise income tax.

(2) The Treasury shall divide the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a natural person registered as a performer of economic activity at the State Revenue Service as follows:

1) 80 per cent shall be transferred into the account of the State social insurance mandatory contributions;

2) 20 per cent - into the account of the personal income tax.

(3) The Treasury shall divide the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - an individual merchant, individual undertaking or farm or fishing enterprise, the owner of which paid the personal income tax from the income earned by the individual undertaking or farm or fishing enterprise in the previous taxation period as follows:

1) 0.1 per cent shall be transferred into the account for the State fee of the business risk;

2) 80 per cent - into the account of the State social insurance mandatory contributions;

3) 19.9 per cent - into the account of the personal income tax.

(4) The Treasury shall transfer the micro-enterprise tax revenue into the accounts according to the division specified in Paragraphs one, two and three of this Section by the twentieth date of the month following the quarter, as well as on the last working day of the economic year.

[20 December 2016 / See Paragraph 24 of Transitional Provisions]

Section 9. Performance and Registration of State Social Insurance Mandatory Contributions

(1) An employee of a micro-enterprise paying the micro-enterprise tax shall be socially insured, beginning from the day when he or she has acquired the status of the employee of a micro-enterprise paying the micro-enterprise tax.

(2) According to the calculated sum of the State social insurance mandatory contributions, the State Social Insurance Agency shall calculate the object of the State social insurance mandatory contributions for a full calendar month (except the case when an employee of a micro-enterprise paying the micro-enterprise tax commences or terminates working in the micro-enterprise) for each employee of the micro-enterprise paying the micro-enterprise tax in proportion to the number of employees indicated in the micro-enterprise tax declaration in each month and their actual income, applying the rate of the State social insurance mandatory contributions which has been specified accordingly to an employee who has been insured according to all types of social insurance, to an employee who has reached the age giving the right to receive State old-age pension or to whom the State old-age pension has been granted (including prematurely) and to an employee who is the recipient of a service pension or who is a person with disability - the recipient of the State special pension.

(3) The calculated object of the State social insurance mandatory contributions shall be rounded up to euros and cents, discarding 0.49 cents and less and rounding 0.50 cents and more up to a cent.

(4) The State Revenue Service shall submit the information referred to in Section 4, Paragraph nine of this Law, the quarterly micro-enterprise tax declaration and information regarding the calculated State social insurance mandatory contributions to the State Social Insurance Agency in accordance with the procedures stipulated by the Cabinet.

(41) An employee of the micro-enterprise paying the micro-enterprise tax shall, in addition to that laid down in this Law, be socially insured in accordance with the law On State Social Insurance.

(5) An employee of the micro-enterprise paying the micro-enterprise tax may voluntarily join the State social insurance by making social insurance contributions once a month from voluntarily selected object which does not exceed the amount of minimum monthly salary laid down by the Cabinet. The employee of the micro-enterprise shall perform State social insurance voluntary contributions according to all types of social insurance, but such employee of a micro-enterprise paying the micro-enterprise tax who has reached the age giving the right to receive State old-age pension or to whom the State old-age pension has been granted (including prematurely) shall perform State social insurance voluntary contributions for insurance of State old-age pensions, maternity and illness insurance, parental insurance and occupational accident insurance; in his or her turn an employee of a micro-enterprise paying the micro-enterprise tax who is the recipient of a service pension or a person with disability - the recipient of State special pension shall perform State social insurance voluntary contributions for insurance of State pensions, occupational accident insurance, disability insurance, maternity and illness insurance and parental insurance. The Cabinet shall determine the procedures, by which employees of a micro-enterprise paying the micro-enterprise tax shall join the State social insurance, the procedures for performance of State social insurance voluntary contributions and the rates of such contributions.

[20 December 2016]

Section 10. Responsibility of Employers for Informing Employees

(1) An employer, in accordance with the procedures specified in regulatory enactments, shall be responsible for provision of false information, if micro-enterprise taxpayer has, without justified reason, confirmed to the State Revenue Service an agreement with employees that he or she is a micro-enterprise taxpayer.

(2) An employer shall reimburse losses caused to an employee of a micro-enterprise paying the micro-enterprise if the employer has not informed the employee that he or she is a micro-enterprise taxpayer in accordance with the procedures laid down in law.

(3) If an employer has not warned an employee in accordance with the procedures laid down in Section 3, Paragraph three of this Law regarding changes in the tax payment procedures, the employer shall calculate the salary tax from the paid work income calculated for the employee in accordance with the procedures laid down in the Law On Personal Income Tax and the State social insurance mandatory contributions for an employee and employer in accordance with the procedures laid down in the Law On State Social Insurance and pay the salary tax into the budget and perform State social insurance mandatory contributions (both the part of the employer and of the employee) from its own resources for the time period from the day when the employer has lost the status of a micro-enterprise taxpayer until the day when a month has passed since the employee received a warning of the employer.

[6 November 2013]

Section 11. Liability for Delay of Due Date for Payment of the Micro-enterprise Tax to be Paid into the Budget and Reduction of the Amount

(1) Late payment charges shall be calculated for delay of due date for payment of the micro-enterprise tax in accordance with the law On Taxes and Duties.

(2) For the micro-enterprise tax infringement identified during a tax review (audit) as a result of which the amount of the tax payable to the budget has been reduced the tax administration shall calculate and enforce on behalf of the budget the amount of underpaid tax and late payment charges for the period from the statutory due date on which the payment of the particular tax fell due up to the date on which the tax review (audit) is started, and impose penalties on the micro-enterprise taxpayer in accordance with the law On Taxes and Duties.

(3) The tax administration shall in addition calculate and enforce on behalf of the budget the amount of underpaid tax and late payment charges for the period from the statutory due date on which the payment of the particular tax fell due up to the decision on the results of data conformity examination for the micro-enterprise tax infringement detected in the data conformity examination.

[20 December 2016]

Section 12. Liability for Other Infringements of this Law

The tax administration shall apply the liability laid down in the Latvian Administrative Violations Code to the taxpayer for non-submission of the declaration laid down in Section 7, Paragraph two of this Law or submission without meeting the time period laid down in the Law.

[20 December 2016]

Transitional Provisions

[6 November 2013]

1. [20 December 2016]

2. Section 1, Clause 1, Sub-clause "e" of this Law shall come into force on 1 July 2014. The part of the profit of a partnership applicable to a micro-enterprise shall be taxable with the micro-enterprise tax, applying the micro-enterprise tax rate laid down in Section 6, Paragraph three of this Law.

[6 November 2013]

3. Section 2, Paragraphs seven and eight of this Law shall come into force on 1 January 2015.

[6 November 2013]

4. If a micro-enterprise taxpayer has issued a loan to a micro-enterprise employee until 31 December 2013, the micro-enterprise employee shall apply Paragraphs 103, 104, 105 and 106 of Transitional Provisions of the Law On Personal Income Tax in relation to such loan.

[6 November 2013]

5. Section 2.1, Paragraphs six, seven and eight of this Law shall come into force on 1 July 2014.

[6 November 2013]

6. Amendment to Section 6, Paragraph one and Section 6, Paragraph 1.1 of this Law shall come into force on 1 January 2015.

[6 November 2013]

7. Section 6, Paragraphs five and six of this Law shall be applied starting with the taxation period from 1 January 2014.

[6 November 2013]

8. When applying Section 7, Paragraphs two and three of this Law in respect of the first quarter of 2015, the time period for the submission of the quarterly micro-enterprise tax declaration and payment of the micro-enterprise tax shall be from 15 May to 25 May 2015.

[19 March 2015]

9. [20 December 2016]

10. [20 December 2016]

11. [20 December 2016]

12. [30 November 2015]

13. The micro-enterprise taxpayers who have acquired the status of the micro-enterprise taxpayer by 31 December 2014, a time period of three years laid down in Section 6, Paragraph 1.1 of this Law shall be counted starting from 1 January 2015.

[23 April 2015 / See Paragraph 14 of Transitional Provisions]

14. [30 November 2015]

15. [20 December 2016]

16. The Treasury shall divide the revenue of the micro-enterprise tax paid into the State budget in 2015 in accordance with the procedures laid down in the law On the State Budget for 2015.

[23 April 2015]

17. The Treasury shall divide the micro-enterprise tax revenue paid into the State budget in 2016 as follows:

1) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a limited liability company, individual undertaking or farm or fishing enterprise, which paid the enterprise income tax from the income earned as a result of economic activity in the previous taxation period:

a) 0.1 per cent shall be transferred into the account for the State fee of the business risk,

b) 72.4 per cent - into the account of the State social insurance mandatory contributions,

c) 23.7 per cent - into the account of the personal income tax,

d) 3.8 per cent - into the account of the enterprise income tax;

2) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a natural person registered as a performer of economic activity at the State Revenue Service:

a) 72.4 per cent shall be transferred into the account of the State social insurance mandatory contributions,

b) 27.6 per cent - into the account of the personal income tax;

3) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - an individual merchant, individual undertaking or farm or fishing enterprise, the owner of which paid the personal income tax from the income earned by the individual undertaking or farm or fishing enterprise in the previous taxation period:

a) 0.1 per cent shall be transferred into the account for the State fee of the business risk,

b) 72.4 per cent - into the account of the State social insurance mandatory contributions,

c) 27.5 per cent - into the account of the personal income tax.

[23 April 2015]

18. [20 December 2016]

19. Section 7, Paragraphs five and six of this Law in the wording which was in force until 31 December 2016 shall be applied in respect of the micro-enterprise tax declarations submitted for taxation periods up to 2016.

[30 November 2015]

20. [20 December 2016]

21. [28 July 2017]

22. A micro-enterprise which from 1 January 2017 would like to acquire or renew (if the status has not been lost in the cases referred to in this Law) the status of a micro-enterprise taxpayer shall submit an application to the State Revenue Service by 31 January 2017 where conformity of the taxpayer is confirmed with the criterion laid down in Section 1, Clause 1, Sub-clause "a" (if the micro-enterprise is a limited liability company) and the criterion laid down in Section 2 of this Law, and also with the conditions laid down in Section 4, Paragraph one in relation to the next taxation period.

[20 December 2016]

23. When applying Section 6, Paragraph one of this Law, the micro-enterprise tax rate for the turnover of the micro-enterprise up to EUR 7000 shall be 12 per cent in 2017.

[20 December 2016]

24. The division of the micro-enterprise tax revenue laid down in Section 8 of this Law shall be applied from 1 January 2018.

[20 December 2016]

25. The Treasury shall divide the micro-enterprise tax revenue paid into the State budget in 2017 as follows:

1) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a limited liability company, individual undertaking or farm or fishing enterprise, which paid the enterprise income tax from the income earned as a result of economic activity in the previous taxation period:

a) 0.1 per cent shall be transferred into the account for the State fee of the business risk,

b) 70.4 per cent - into the account of the State social insurance mandatory contributions,

c) 27.6 per cent - into the account of the personal income tax,

d) 1.9 per cent - into the account of the enterprise income tax;

2) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - a natural person registered as a performer of economic activity at the State Revenue Service:

a) 70.4 per cent shall be transferred into the account of the State social insurance mandatory contributions,

b) 29.6 per cent - into the account of the personal income tax;

3) the micro-enterprise tax revenue paid into the State budget by a micro-enterprise taxpayer - an individual merchant, individual undertaking or farm or fishing enterprise, the owner of which paid the personal income tax from the income earned by the individual undertaking or farm or fishing enterprise in the previous taxation period:

a) 0.1 per cent shall be transferred into the account for the State fee of the business risk,

b) 70.4 per cent - into the account of the State social insurance mandatory contributions,

c) 29.5 per cent - into the account of the personal income tax.

[20 December 2016]

26. A micro-enterprise taxpayer, upon applying Section 6, Paragraph 3.1 of this Law in the taxation years of 2018 and 2019, is entitled to not to apply Section 6, Paragraph three of this Law to the turnover which does not exceed EUR 52 000, if the annual turnover of the pre-taxation year of the micro-enterprise taxpayer or the turnover of the year which is before the pre-taxation year exceeds EUR 40 000.

[28 July 2017]

27. Section 2.2 of this Law with regard to the employees of a micro-enterprise who are employed by the micro-enterprise taxpayer on 31 December 2017 shall be applicable from 1 January 2019.

[28 July 2017]

28. Until 1 February 2018, the State Revenue Service shall inform via the Electronic Declaration System those micro-enterprise taxpayers who as on 31 December 2017 employ such natural persons who are employed also by another micro-enterprise taxpayer of the restrictions referred to in Section 2.2 of this Law, indicating the given name, surname and personal identity number of the employee of the micro-enterprise.

[28 July 2017]

29. Amendments to Section 3, Paragraph one of this Law with regard to the obligation of a micro-enterprise taxpayer to include the information referred to in this Paragraph in the employment contract shall apply to contracts concluded after 1 January 2018.

[28 July 2017]

This Law shall come into force on 1 September 2010.

This Law has been adopted by the Saeima on 9 August 2010.

President V. Zatlers

Riga, 19 August 2010


1 The Parliament of the Republic of Latvia

Translation © 2018 Valsts valodas centrs (State Language Centre)

 
Document information
Status:
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in force
Issuer: Saeima Type: law Adoption: 09.08.2010.Entry into force: 01.09.2010.Theme:  Commercial rights; Taxes and dutiesPublication: Latvijas Vēstnesis, 131, 19.08.2010.
Language:
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