EN 
LV On amendments to the law "On State Social Insurance"
We are sending for information the draft law "Amendments to the Law "On State Social Insurance" (VSS-514), as specified by the Ministry of Welfare, its annotation and statement with the expressed objections.
We would like to inform you that the Ministry of Agriculture will maintain all the objections expressed, as we do not agree with any of the arguments presented by the Ministry of Welfare.
Proposals from the Ministry of Welfare
The draft law provides that from January 1, 2022, the self-employed will maintain the same social insurance procedure as established by law from July 1, 2021 to December 31, 2021, i.e.:
1) self-employed persons whose income does not reach the minimum wage per month pay 10 % for pension insurance from their actual income;
2) self-employed persons whose income reaches or exceeds the minimum monthly wage shall pay 31.07 % from a freely selected contribution object, which is not less than the minimum monthly wage, and 10 % for pension insurance from the difference between the selected contribution object and actual income;
3) a self-employed person may submit an income forecast to the SRS;
4) for a self-employed person who has not submitted an income forecast to the SRS and whose income (for a micro-enterprise taxpayer – turnover) does not reach the minimum mandatory contribution object, minimum mandatory contributions shall be made from the difference between the actual income and the minimum mandatory contribution object;
5) The SSIA calculates the minimum mandatory contributions for the self-employed once a quarter (by the 20th of the third month following the quarter) and informs the SRS; the self-employed may make an advance payment of the minimum mandatory contributions by the 23rd of the third month;
6) The SSIA shall calculate the minimum mandatory contributions for the self-employed person for the previous calendar year by March 20 and inform the SRS; the self-employed person is obliged to make the minimum mandatory contributions for the previous calendar year by June 23 of the current year.
Objections from the Ministry of Agriculture
As stated in paragraph 2 of the draft law, Article 14 of the law1 The second part of Article 14 of the Law stipulates that self-employed persons whose monthly income reaches or exceeds the minimum wage determined by the Cabinet of Ministers shall, in addition to the mandatory contribution object specified in the second part of Article 14 of this Law, make mandatory contributions to the state pension insurance once a quarter in the amount of 10 percent of the difference between the freely selected mandatory contribution object and the actual income.
Please note that until December 31, 2020, the law stipulated that a self-employed person from agricultural production income must calculate and pay mandatory pension insurance contributions once a year in the amount of at least five percent of the difference between the freely selected mandatory contribution object for the taxation year and the actual income. In turn, mandatory state pension insurance contributions for a self-employed person from agricultural production income for the previous taxation year had to be paid by April 15 of the current year, not once a quarter.
We remind you that such a legal provision was incorporated into the law because the agricultural sector is highly seasonal in nature. Farmers' income and expenses on the farm arise seasonally. In several areas of the agricultural sector (for example, crop production, beef cattle breeding), the periods of income generation are not balanced with the periods of expenses. For example, the sale of grain products is mostly at the end of the year and the beginning of the year, when the farm does not incur expenses related to agricultural activities. Beef cattle are also sold for a few months a year, although the expenses for their breeding and maintenance are incurred throughout the year.
By imposing the obligation to make mandatory contributions to state pension insurance every quarter, for those months in which the farmer will earn income from the sold products, disproportionately large mandatory contributions to state pension insurance will have to be made, despite the fact that in the annual period the farmer will work at a loss and the farm will not make a profit. Taking into account the current offer, 10 percent state social insurance contributions for the agricultural sector will be like a new additional turnover tax. Because those farmers whose activities are strongly seasonal in nature will have to pay this tax from the income (turnover) earned in a specific month, since there will be no expenses in the relevant month of income generation. We believe that such a procedure for mandatory contributions to state pension insurance is disproportionate for farmers, because from the income earned in a specific month, with which it is planned to cover expenses for the next period, mandatory contributions to state pension insurance will have to be paid in the amount of 10 percent.
It should be noted that agricultural production is associated with expenses and investments. In the process of agricultural production, it is necessary to continuously make investments in the purchase of land, land lease payments, as well as in the purchase of transport, equipment and machinery, the purchase of livestock, the establishment of permanent plantations, which are very expensive investments and without which agricultural production is impossible. In addition, self-employed persons who carry out economic activities in the agricultural sector are also employers who provide jobs in rural areas and, accordingly, also pay labor taxes for employees.
Taking into account the above, we ask that the provisions of Article 14 of the law, as expressed in paragraph 2 of the draft law, be amended.1 to add a new paragraph to the following wording:
"(21) self-employed persons shall calculate and pay mandatory contributions to state pension insurance in the amount of 10 percent of their agricultural production income once a year from the tax year, based on the difference between the freely selected mandatory contribution object and the actual income.”
We call for the establishment of mandatory pension insurance contributions in the amount of 10 percent of the difference between the freely selected mandatory contribution object and the actual income, which may not be made by a self-employed person who is simultaneously an employee and for whom mandatory contributions in the status of an employee are made at least from the minimum wage determined by the Cabinet of Ministers.
We ask for your opinion on the draft law. by July 20, 2021 to e-mail: martins.trons@zemniekusaeima.lv