Top 5 Business Offers For The New Government That Will Affect Your Wallets Business

Confederation President Andrius Romanovskis said companies are pleased that the new government is not talking about taxes promising changes per se, but is using the debate about them as an object of social dialogue.

He welcomed the decision of the Ministry of Finance to convene a working group to review tax regulation.

Speed ​​is probably your worst ally when it comes to taxes. In this case, the Lithuanian proverb is the most correct to measure nine times, to cut the tenth time.

“This shows that we are following the path of conversation and negotiation, not the principle that has been applied in Lithuania so far, which” you have consulted, we have decided, “said A. Romanovskis.

“It is good news for business in Lithuania that there will be talks, negotiations and only then will decisions be made,” he added.

A business spokesperson also urged not to rush with the tax changes.

“Speed ​​is probably the worst ally when it comes to taxes. In this case, the Lithuanian proverb is the most correct to measure nine times, to cut the tenth time, ”said A. Romanovskis.

Below are the top five proposals from the Lithuanian Business Confederation.

1. Reduce the rate of progressive GPM

The Business Confederation proposes to the government to return 27 percent. Progressive rate of Personal Income Tax (PIT), instead of the 32 percent that came into force last year.

This is the new progressive GPM rate that will take effect in 2019, when it stood at 27 percent. At the same time, Sodra’s contribution caps were introduced, which determine from what annual income a higher GPM will be paid.

The state must fulfill its obligations, its promises, it cannot break them.

Sodra’s contribution ceiling now reaches 60 Lithuanian average salaries, and the progressive GPM rate has increased to 32 percent. in accordance with the modifications that came into force last year.

That is, the part of the annual income received that exceeds 60 VMU or 87 thousand. it is taxed at 32%. The GPM rate and income not exceeding this amount is taxed at the standard rate of 20%. tariff.

However, 32 percent. The GPM fee does not satisfy commercial representatives. According to them, last year it was decided to introduce this fee in violation of government and commercial agreements.

“The State must fulfill its obligations, its promises, it cannot break them, so we propose to return the agreement that was approved in 2018,” said A. Romanovskis.

In the year you mentioned, the government, with the social partners, proposed 27 percent. GPM rate.

At the same time, the Lithuanian Business Confederation proposes not to reduce the ceiling of Sodra contributions and to leave 60 percent. average salary.

2. “Livestock” or medicine?

The Lithuanian Business Confederation does not agree with the statement that the tax benefits should be considered as a “livestock farm” that creates unequal conditions for taxpayers.

Relief is not bad. They are targeted as a drug that determines in which direction we want to push people.

According to the organization’s vice president, financial analyst Marius Dubnikov, the state encourages changes in citizens’ behavior through tax breaks.

“The benefits are not bad. They are targeted as a drug that determines in which direction we want to push people, ”said M. Dubnikov.

First, the confederation proposes tax incentives for the accumulation of pensions. At present, those who accumulate a second and third pillar pension can recover up to € 300 per year as a GPM benefit, depending on the size of their contributions to the pension funds.

It is proposed to increase this possible recoverable amount. However, the Lithuanian Business Confederation does not specify the exact amount.

“We suggest that the government initiate a discussion on this issue,” Dubnikov said.

It is also proposed to apply GPM relief to health services provided by unlicensed institutions. According to the Lithuanian Business Confederation, the benefit of GPM in 2019 was reduced by the comment of the State Tax Inspectorate, provided that health care services can only be provided by authorized health care institutions.

The organization proposes changes to health insurance and health care legislation to make health care provided by unlicensed persons to prevent disease or promote health a health care (health) service and to expand the scope of these services to those who are not licensed. medical insurance covered by the GPM. relief, volume.

As for the self-employed, the confederation proposes to link individual activities exclusively to professional activities, and in other cases set 45 thousand. income limit per year.

This is proposed in order to avoid abuses when “more migratory” between legal-organizational forms of business activity due to more favorable taxes. 45 thousand The self-employed who have reached the income limit must choose another form of business.

Finally, the Lithuanian Business Confederation proposes to abandon tax incentives for fossil fuels.

3. Social security system

Proposals to the Government establish that in cases where fixed-term employment contracts are signed to replace employees on paternity leave or called up for military service, it is incorrect to force the employer to pay a 1.55-fold increase in the unemployment insurance contribution rate.

Therefore, the companies propose an exemption from the increase in the unemployment insurance contribution rate for fixed-term employment contracts in such cases.

As an alternative, the possibility of waiving the application of different unemployment insurance contribution rates to fixed-term and indefinite-term employment contracts is generally proposed.

The Business Confederation proposes to modify the legislation so that the obligation to pay social security contributions no longer falls on the employer but on the worker in cases where wages are not paid because of the worker.

According to her, according to current legislation, an employer may find himself in situations in which he will be required to pay social security contributions by an employee who did not go to work and was not paid because, for example, he was issued a certificate doctor of absence. The employee was found to be at fault for the deteriorating health, for example, he was intoxicated and suffered an injury.

The Confederation also proposes to transfer responsibility for the payment of social security contributions to an employee in cases where benefits are already paid after the termination of the employment relationship.

4. Tourism sector

The Lithuanian Business Confederation proposes that the Government provide additional tax incentives for the tourism sector, especially those affected by the coronavirus pandemic.

Nobody knows what will happen to the tourism sector. Neither the tourism sector knows what to expect, nor the state, nor us.

Two measures are proposed. First, establish in the law the provision of inbound tourism services and accommodation to foreigners as exports of services and apply a zero rate of value added tax (VAT).

It is also proposed to apply a reduced rate of 5%. VAT on medical care provided in authorized establishments of personal medical care institutions, such as SPA hotels, wellness centers.

Romanovsky said such benefits could continue for the sector after the pandemic, mainly because it would take more than a year to recover.

“Nobody knows what will happen to the tourism sector. Neither the tourism sector knows what awaits it, nor the state, nor us,” he said.

According to the president of the Lithuanian Business Confederation, the state already taxes the tourism sector quite strictly, especially considering that the services provided to foreigners can be interpreted as the export of services.

According to him, the incentives would also help strengthen the tourism sector in general.

“If the state’s strategy is to strengthen this segment, then the benefits are part of that political strategy,” Romanovsky said.

5. Updates of laws

Not as specific as the strategic proposal of the confederation is to review all the laws that regulate the Lithuanian tax system and present them in a new wording.

“In most cases, those basic documents are between 15 and 20 years old,” Romanovsky said.

According to the organization, old laws that are constantly being modified or modified give rise to ambiguities, which are left to the STI for comments, which basically “correct” the deficiencies of the legal acts.

It proposes modernizing the laws that govern the tax system by clarifying key elements of taxation, such as what is not considered income and what is considered but not taxed.

According to the confederation, obvious regulatory misunderstandings should also be corrected, for example when a natural person who borrows money from another natural person has to deduct the GPM from the interest paid and pay it directly to the budget, and companies do not have to.