The amendments to Micro-enterprise Tax Law and the Law "On State Social Insurance" adopted last year that provided separation of the micro-enterprise tax (MET) from the national social security contributions (SSIC) and implementation of a minimum amount of SSIC to each micro-enterprise employee starting from 1 January 2017 have been repealed. The arrangement for a minimum amount of SSIC for all employees with lower salary than the national minimum salary is also canceled.

State social insurance compulsory contributions

The next year, general SSIC rate will remain unchanged - 34.09% (employer's rate - 23.59% and the employee’s - 10.5%). The persons who have reached retirement age, the total contribution rate will be 29.73%, for persons receiving a retirement and disability pension - 31.57%, the company’s board members - 26.84% and board members who have reached retirement age - 24.54%, the self-employed - 31.13%, retirement age of self-employed workers - 29.25%, landlords and land lessors - 26.38%, foreign employee of foreign employer - 31.71%.

The risk duty for employees in 2017 remain the same as in 2016 i.e., 0.36 EUR per employee.

Micro-enterprise tax

On 20 December 2016, the Latvian government has adopted new amendments to the Micro-enterprise Tax Law that provides 15% MET rate, while 12% rate will apply to taxpayers with a turnover of up to 7 000 euros a year starting with 1 January 2017.

The amendments stipulate that 70.4% of income from MET will be allocated to the SSIC budget account, while 80% in 2018.

According to the amendments of the Micro-enterprise Tax Act, the provision of the restricted industries performing economic activity provided that the taxpayer is not entitled to be a MET payer is excluded.

Hereafter procedures for assessment of fines and late payment, as well as responsibility for failure to submit or submitted outside the deadlines will be defined in the MET law.