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Expert: increased PIT rate requirements are disadvantageous for recipients of royalties

Guntars Licis/lpia.lv.
Personal Income Tax rate of 23%, the requirements of which provide that recipients of royalties are able to recover 3% of overpaid tax, is disadvantageous, says Latvian Press Publishers Association CEO Guntars Licis.


He says this option is viewed negatively for people receiving royalties because any tax increase affects income.
 

Licis adds that any tax residents can recover is not really all that valuable, because most residents who receive royalties do not try recovering overpaid tax because of complicated bureaucratic processes. «Any bureaucratic process is difficult, and it is because of that residents receive less money,» says Licis.
 

At the same time, he says it does not mean people will not chase after any recoverable tax amount.
 

He mentions social tax fees recipients of royalties have to perform personally. «I wouldn’t say residents are not honest and that they do not pay social tax, but the bureaucratic way of doing that […] makes life harder for people,» said Licis.
 

He adds that in the event of overpaying PIT, residents have to go through additional bureaucratic processes, which can easily deter them from wanting to recover the overpaid amount. This is why LPIA plans to ask the government «not to make life hard for people».
 

Licis also explains that tax changes will force employers to pay more even though revenue, especially on the printed press market remains the same.
 

As it was previously reported, the tax reform proposes introducing differentiated PIT rate starting 1 January 2018. The rate for annual income up to EUR 20,000 is planned to be 20%, for income up to EUR 55,000 – 23%, and for income above EUR 55,000 – 31.4%. The legislative draft provides leaving PIT rate for recipients of royalties at 23% and leaving the opportunity to submit a declaration to the State Revenue Service to recover 3%.

BNN/LETA

17-07-2017
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