The Saeima addresses issues important to farmers

On November 23, the Saeima Budget and Finance (Tax) Committee considered the package of draft laws accompanying the 2016 budget, in which several proposals were also initiated by the association “Farmers’ Saeima” (ZSA) together with Saeima MP Edgars Putras. The association expresses its satisfaction that the deputies have delved into the current difficulties of farmers with understanding and have supported several of the association’s proposals related to the state’s tax policy.

ZSA Board Chairman Juris Lazdiņš: “The Russian food embargo has not been lifted, it continues to negatively affect the economic situation of Latvian farmers, especially dairy farmers and fruit and vegetable producers. We also continue to receive the lowest direct payments in the entire European Union (EU). Taking into account the above, the legislative changes we initiated and submitted by Saeima Member Edgars Putra will create a mechanism that will allow strengthening the competitiveness of Latvian farmers.”

The most significant proposals supported by the Saeima commission are amendments to the laws "On Real Estate Tax", "On Personal Income Tax" and "On Excise Tax".

As J.Lazdins points out, the increase in the cadastral value of agricultural land and the resulting real estate tax (NIR) is too rapid and unpredictable, which significantly complicates the work and implementation of business plans of agricultural producers. The ZSA has repeatedly indicated that the increase in NIR should not exceed 10% annually, compared to the previous year. The proposal supported by the Saeima commission provides for such a restriction on NIR until 2025.

In the Law “On Personal Income Tax”, the ZSA calls for determining that subsidies for those farmers who are PIT payers would not be taxed until 2018. The ZSA proposal is directly related to the situation that Latvian farmers still receive the lowest direct payments in the entire EU during this planning period. Similarly, as the association points out, in Lithuania, where farmers also receive low direct payments, subsidies are not taxed for this very reason. The proposal was supported – if agricultural land is sold to a farmer, then the seller of the land will be exempt from PIT payment. It is planned that this exemption will be valid until 2018.

Amendments to the Law “On Excise Duty” provide that farmers will be able to use marked diesel fuel in trucks not only for the transportation of grown agricultural products, but also for their own transportation of raw materials necessary for production. The supported proposals provide that in this situation, a truck using marked diesel fuel will be able to be not only a farmer’s

in ownership, but also in possession. ZSA recalls that in October the European Commission explained in an official letter to the association that diesel fuel intended for agricultural work may not be colored.

All of the above amendments still need to be decided by the Saeima in the second and final reading. ZSA, together with MP E. Putra, is currently also developing a proposal that would exempt subsidies from taxation for those farmers who are corporate income tax payers.