In order to pull small entrepreneurs out of the “shadows”, a “carrot” must be given / Article

When asked how to motivate small service providers, who often do not issue checks, to pay all taxes, the head of the SRS said that she has submitted her proposals in this area to the Ministry of Finance (FM) and currently there are “tough” discussions about them.

“This proposal is exactly that – to bring out from the shadows and especially the service providers, where one natural person provides a service to another natural person, to somehow motivate them to pay these taxes anyway. At the moment, there is a discussion on what conditions to allow to do, for example , additional works.

The basis of my proposal: to pull out of the shadows, you have to give a carrot,” said Šmite-Roķe.

According to the head of the SRS, this “carrot” could be an opportunity to pay less personal income tax (IIN) and mandatory State social insurance contributions (VSAOI). For example, when registering as an economic operator, the total tax rate could be 10-15% in the first year.

This would be similar to the Micro Enterprise Tax (MUN) in the past when the rate was 9-15%. The experience with the low MUN rate, with many companies re-registering as micro-enterprise taxpayers, had an overall negative effect.

“That’s why a lot of restrictions have to be imposed here,” said the director general of the SRS. “But what’s the point? These people are still in the shadows right now, and they’re not on social security. (..) If we put a lower rate, they’ll come out [no ēnas] and the state will at least get this 10-15% in the total budget.”

Šmite-Roķe added that it would not be a return to the original version of the MUN regime.

“I think that you should definitely not do that, to get on the rake a second time, it would be quite stupid. Therefore, these conditions could be narrower,” said the head of the SRS.

For example, lower taxes could be introduced for specific types of service provision for additional works. “If you are permanently employed in a workplace and if you have an additional job, then you have the opportunity to pay lower taxes,” said the head of the SRS.

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