Latvian government to make decision on tax reform guidelines next week

RIGA - The Latvian government will make the decision on the tax reform guidelines next week instead of this week as it had been planned earlier.

Next week, on May 2, Prime Minister Maris Kucinskis (Greens/Farmers) will meet with the Unity representatives to answer questions about the reform. The government will have to make its decision on Wednesday, May 3.

The discussion of coalition parties about the reform has also been postponed to next week, Kucinskis told the press.

The ruling Unity party plans to invite Kucinskis to the meeting of its parliamentary faction in order to receive answers to all questions concerning the proposed tax reform. The party's deputy chairman Edvards Smiltens underscored that the party in principle supports the tax reform.

As reported, the Finance Ministry has sent its draft plan for tax reforms to ministries and partners for review. The Finance Ministry sent the blueprint of the national tax policy framework 2018-2021 to all line ministries, as well as social and other partners and expects to put the draft document before ministers at an extraordinary government meeting slated for April 28.

The tax reform proposed by the Finance Ministry provides for cutting personal income tax rate from 23 percent to 20 percent, scrapping solidarity tax and leaving microenterprise tax in place. The 20 percent tax rate would be set on personal income that does not exceed EUR 45,000 a year, and a 23 percent tax would be charged on income exceeding EUR 45,000 a year. The differentiated nontaxable minimum income would be significantly increased, and many other changes have been planned.

Reduction of tax revenues as a result of the tax reform will be compensated by excise tax hike on fuel, cigarettes and alcohol, according to the blueprint of the national tax policy framework 2018-2021 prepared by the Finance Ministry.