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PREDICTABLE AND STABLE TAX POLICY FOR THE BIOECONOMY SECTOR
Abstract
The development of areas of bio-economy, which replace fossil fuels with bioresources in production and the provision of services, is important in many countries. Therefore, in 2017, the government approved the Latvian Bioeconomy Strategy 2030, which provides for four key integrated groups and one complementary group of measures to implement this strategy. As five years have passed since the strategy was approved in Latvia, it is necessary to assess the progress of its implementation. Therefore, the aim of the present research is to study one of the sections -Predictable and stable tax policy for the bioeconomy sector- for the implementation of the strategic goal of the Latvian Bioeconomy Strategy 2030 -Attractive business environment for entrepreneurship in the bioeconomy- in Latvia. The study concluded that the tax reforms implemented in Latvia in 2018 can be positively assessed and the bioeconomy sectors account for 25% of national tax revenues. The most significant investment is in the payment of corporate income tax (CIT) and in the field of compulsory state social insurance contributions (SSIAI), as the bioeconomy sectors account for 24% and 20% of the respective tax revenues to the state budget. In turn, the smallest share of bioeconomy sectors is in value added tax (VAT) payments, which are determined by the reduced VAT rates and the procedure of application of reverse VAT in certain sectors of production of bioresources and the provision of services. The tax system needs to be further assessed and improved, in particular as regards the ability of companies to adapt to the new EU Green Deal policy.
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