The Latvia's Association of Small and Medium Enterprises is advocating for changes to the Value Added Tax (VAT) law concerning the use of cross-border platform services. Their goal is to alleviate bureaucratic burdens faced by small entrepreneurs and mitigate the risk of insolvency. A key discussion point will take place on March 10 in the Saeima's Budget and Finance (Tax) Committee, focusing on a special VAT regime and the current situation surrounding tax compliance.

Starting from July 1, 2025, a special VAT registration procedure will require small businesses to pay VAT only on services or goods obtained from platforms in European Union (EU) countries, rather than on their sales. However, the association has pointed out that this new procedure has introduced excessive bureaucracy for entrepreneurs, who now need to calculate taxes based on all turnover for the past three years. This complexity raises concerns about the sustainability of small business operations in Latvia.

Tamāra Rubene, a board member of the Latvia's Association of Small and Medium Enterprises, expresses that the evolving tax conditions threaten thousands of small businesses. The association is pressing for an urgent review and amendment of the VAT regulations to create a more manageable and sustainable environment for small entrepreneurs, aiming to reduce risks associated with compliance and insolvency due to the onerous regulations.