Criticism of small business and the Presidency of changes to the operating authorization procedure

“The main reasons for disapproval are, firstly, the assessment of the impact of the legal regulations, on which the Ministry of Finance bases the tax reform project, was carried out in possible violation of the provisions of the legislative framework law, as the assessment presented by the representatives of the ministry was carried out in accordance with the 2021 plan according to the data, when there was a COVID-19 pandemic in Lithuania,” said Z. Sorokienė during the hearings of the Budget Committee and Finance of the Seimas (BFK).

“Therefore, the information on tax returns submitted by business licensees is not accurate and all other data information is not accurate because there was a COVID-19 situation and the business market was distorted. “, she added.

Z. Sorokienė also noted that the Ministry of Finance has not assessed the impact of tax changes on small and medium enterprises in the short, medium and long term.

“It has not been assessed how the tax changes will affect small and medium-sized enterprises, in particular business license holders and the social environment in the short, medium and long term. Today, we have not seen a such a study and we don’t have it,” said the representative of small and medium-sized enterprises.

“There has been no consultation with the business community and generally with the public on what the transformation project should look like, as the Ministry of Finance is winding down the activities of the task force established tax,” she said.

Meanwhile, the representative of the National Network of Poverty Alleviation Organizations, Aistė Adomavičienė, assured that the most vulnerable people should not be affected by the planned changes.

“In principle, we agree, but it is worrying that the absolute number is recorded. It would be worth relating this to the average wage (VDU), taking into account inflation, and not writing a number absolute of 20,000 euros, and to get in touch with VDU to modify the amount.Among our members, customers, there are people who return to the labor market, say single mothers after raising children, who engage in this activity. I don’t think that the most vulnerable will be affected by the changes,” said A. Adomavičienė.

The government proposes to reduce the upper limit of the application of fixed income tax for holders of a business license – to apply a fixed taxation on turnover up to 20,000. EUR instead of 45 thousand. euros as is currently the case.

According to the business license, it is also proposed to prohibit residential rentals. Instead, income from these activities would be subject to a rate of 15%. personal income tax rate of 80 percent. turnover.

Mantas Gudas, vice-president of the Confederation of Lithuanian Industrialists (LPK), was also inclined to support changes in the order of business licenses, pointing out that competing businesses now have different tax regimes.

Mantas Gudas

“We have the Builders Association, Hotel and Restaurant Association, Service Representatives in our membership lists, and we see an issue that we want to voice and support this initiative – there are businesses competing against each other in form and have completely different and non-uniform tax regimes,” Gud explained.

“The support would be to organize business certificates, where there is direct competition with equity gated communities and other businesses that pay other tax regimes and support for small businesses, where the business is really small,” he added.

Presidency: There are many loopholes in the changes to the commercial licensing procedure

However, Vaidas Augustinavičius, adviser to President Gitanas Nausėda, did not hesitate to criticize the planned changes in the order of business licenses. According to him, the worsening of tax conditions for low-income independent entrepreneurs is “the opposite of justice”.

“There is a lack of justice in this place, there are a lot of regressive elements in this place, tax reform should encourage people’s incomes to grow, not squeeze them and freeze them at low levels.” This place needs to be improved and has a lot of shortcomings, taxes should not be increased for low-wage earners”, underlined the representative of the Presidency.

G. Skaistė: the proposals emerged after a study conducted by the OECD and the EC

“The proposals mentioned in the study are included in the draft law – both concerning the regulation of commercial licenses. Their proposal was to reduce the limit to 20 thousand euros, from 45 thousand euros. According to our available data, 84% people who carry out activities according to a business certificate, they pay a fixed personal income tax, their annual income does not exceed 20,000 euros, and they could continue to purchase a business license and exercise activities by paying a lump sum personal income tax,” said G. Skaistė.

Gintare Skaiste

“For people with higher incomes, the OECD study recommends that they move into self-employment based on a certificate,” she said.

ELTA recalls that the tax system review package, which has generated much debate, was approved by the Seimas at the end of June after its presentation.

Criticism of the reform was voiced in a joint statement by 54 trade and professional associations. Business structures that prepared appeal to factions and Seimas committees urge parliament to reject proposals to increase personal income tax, arguing tax hike will worsen business environment of the country, will harm Lithuania’s competitiveness and encourage the underground economy.

The tax reform presented by the government provides for a tax increase for certain self-employed persons. After the adoption of the amendments, more people will have to pay property tax, the procedure for applying for certain benefits will change and a minimum unemployment benefit will be introduced.

According to Finance Minister Gintarė Skaistė, 800,000 people would feel the benefits of the reform – due to the increase in the amount of non-taxable income. population or 70 percent of all workers in the country, whose income is below an average wage. At this time, the tax burden, after changing the GPM model, would increase by about 17.5 thousand. individuals working individually.

The Budget and Finance Committee of the Seimas was approved as the main committee examining draft laws, and the Committees for Economy, Rural Affairs and Social Affairs and Labor as additional committees. The amendments are expected to come back to parliament in the fall session.

Source: The Delfi

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