TAX INCENTIVES FOR MICRO ENTERPRISES - LATVIA'S EXPERIENCE

The author continues studies on tax incentives for micro enterprises. Latvia has introduced a special tax regime - a micro-enterprise tax (MET), the improvement of which still continues to reduce its application for unfair tax competition. Following significant changes in the tax regulation, the popularity of MET in Latvia has decreased; though, it is still high, especially in the service sector. The micro-enterprise tax shall be retained considering the reduction of administrative and tax burdens; however, it is recommended to introduce a payment for every employee from his/her actual salary in addition to the payment from the enterprise turnover to ensure the tax sustainability and to improve the social security of micro-enterprise (ME) employees. Latvia's experience may be useful also for other countries, especially those with high unemployment and illegal employment rates, to stipulate involvement of the population in legal employment.