The State Revenue Service of Latvia (SRS) is pleased to announce that it has expanded its service platform with a new option to open a special Commercial Activity Income Account (SDI) for micro-enterprises to automate tax payment and submit tax returns. With this new opportunity, all income from economic activity is deposited to this account, and the bank, in cooperation with SRS, calculates and pays tax and submits the micro-enterprise tax return automatically.
Opening an SDI account is not mandatory for the micro-enterprise taxpayers. However, if a new or a current micro-enterprise taxpayer wishes to use the service, they only need to follow the next steps:
- Open a current account with a bank that provides SDI account services
- Submit an application to SRS through the Electronic Declaration System (EDS)
All commercial income, including cash payments must be deposited into the SDI account.
How does the automated tax payment work?
The micro-enterprise tax rate for income is:
- up to 25 000 EUR – 25%
- over 25 000 EUR — 40%
The bank reserves 40% (the maximum rate) of each deposit into the SDI account. SRS verifies that annual income has not exceeded 25 000 EUR. If it has not been done, the reserved amount is released to the account within two business days, and 25% is paid into the state budget. If the income exceeds 25 000, 40% of the amount exceeding 25 000 EUR is paid to the state.
SDI accounts can be easily terminated by submitting an application through EDS no later than 3 business days before the taxpayer plans to stop using the account. SRS informs the bank that then calculates income to the closing date and pays the tax automatically.
SDI accounts will be terminated automatically if:
- the taxpayer ceases to operate as a micro-enterprise and starts using another tax payment regime or
- use of the SDI account is not approved or suspended by the bank for one of the following reasons:
- the account is deemed a basic account within the meaning of the Law on Payment Services and Electronic Money
- the account has been closed or is being closed
- the supervisory authority of commercial banks has limited making payments from the account