Employees’ social contributions up by 2% in 2011. Employees’ social contributions will increase from currently 9% to 11% of gross wages, while employers’ social contributions rate will remain at 24.09% of gross wages. This is added to the VAT rate being increased from 21% to 22% (from 10% to 22% for electricity). These changes were accepted by the Latvian Parliament on December 20th, despite heavy criticism by employers, experts and unions, who pointed out that prior to the Parliament elections that took place this October all political forces had expressed willingness to reduce the tax burden on employees. The Ministry of Finance pointed out that the personal income tax decrease from currently 26% to 25% in 2011, as well as the increased non-taxable minimum share of one’s wage (currently 35 LVL, in 2011 to be 45 LVL) somewhat counteracts this social contributions tax increase, but still aims to generate an extra 69 MLVL for the 2011’ state budget via the new order of labour taxation.
ent on December 20th, despite heavy criticism by employers, experts and unions, who pointed out that prior to the Parliament elections that took place this October all political forces had expressed willingness to reduce the tax burden on employees. The Ministry of Finance pointed out that the personal income tax decrease from currently 26% to 25% in 2011, as well as the increased non-taxable minimum share of one’s wage (currently 35 LVL, in 2011 to be 45 LVL) somewhat counteracts this social c
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