From the end of 2022, certain individual merchants, economic operators and farmers' and fishermen's farms, who are micro-enterprise tax (MUN) payers, have the opportunity to use a simplified MUN payment solution - the economic activity revenue account (SDI account). Let's take a look at who can use this account, how the mentioned SDI account solution works, what are its advantages and what you should pay attention to.
In the general case, the MUN payer must keep accounting records. Once a quarter, the MUN payer's declaration must be submitted to the State Revenue Service (SRS) and the MUN payment must be made. In 2022, the SRS, in cooperation with the credit institution - joint-stock company (JSC) "Industra bank" - created a special current account in the bank in order to provide the economic activity performers, MUN payers, with the opportunity to automate tax calculation and payment. The SDI account user also has the option not to submit the MUN quarterly declaration.
What are the benefits of an SDI account?
Using SDI account solutions provides several advantages to the taxpayer:
- simplified tax calculation and payment;
- The MUN payer has the opportunity to plan his cash flow much earlier (the tax is calculated and paid immediately, without waiting for the end of the quarter);
- tax accounting is facilitated for the taxpayer - communication about the preparation of the declaration, tax calculation and payment takes place between the bank and the SRS;
- The MUN payer no longer has to prepare MUN declarations to be submitted to the SRS;
- to submit the MUN declaration, the taxpayer does not need to hire an accountant;
- Anyone can make payments to the SDI account, including the buyer;
- when making a non-cash (or cash) deposit to the SDI account, it is not necessary to specify additional information in the payment destination;
- A payment card can be added to the SDI bank account.
It should be noted that the main account of the MUN payer can also be in another credit institution (not only "Industra bank").
What should the MUN payer consider?
For now, only one bank offers SDI account services in Latvia - AS "Industra bank".
The SDI account cannot be the main account of the MUN payer, therefore the taxpayer incurs costs for at least two current accounts in the bank.
If a contribution not related to economic activity has been credited to the SDI account, the taxpayer should expect more complicated clarification of the tax return. In this case, the MUN payer should contact both the bank and the SRS and provide additional explanations about the incorrect transfer. An additional fee is charged for canceling the money transfer (according to the bank's current price list). The taxpayer should expect a fee for closing the SDI account. Currently, it is more than the cost of opening.
Who can use an SDI account?
Using an SDI account is a voluntary opportunity for MUN payers to use a simplified tax payment solution without the involvement of the taxpayer himself. Tax calculation and payment is carried out by the bank in cooperation with the SRS.
Currently, such a solution can be used by the following MUN payers:
- individual traders;
- performers of economic activity;
- farmers, fishermen.
In addition, according to the Microenterprise Tax Law (MUN Law), the MUN payer must meet several requirements:
- must not have a tax debt. On the day when the MUN payer applies to use the simplified tax payment solution, he has no tax debt;
- must not be employed.
- The SDI account is designed for a simplified tax payment solution with no deductible expenses. Tax is calculated from all payments received;
- accounting records are in a simple entry system.
- This is due to the fact that in the simple record system, revenue is generated at the moment when payment (cash or non-cash) is received for the goods sold or the services provided;
The SDI account is only intended for tax calculation and payment. It should not be the basic account of the taxpayer, as it is intended only for accounting of economic activity revenues. If money is credited to the specific account that is not related to the sale of your goods or services, MUN will be calculated and paid for it.
How to register an SDI account?
To register an SDI account, follow these steps:
- an SDI bank account must be opened. Since the SDI account service is relatively new, the MUN payer should first find out whether the bank he chooses provides such a service;
- the SID must be informed about the opened SDI account. Using the electronic declaration system (EDS), the taxpayer prepares an application to the SRS regarding the use of the SDI account, indicating the SDI bank account number;
- the decision of the SRS must be awaited. The SRS evaluates the received application within five working days and provides a written response to the decision.
According to the MUN law, an already registered MUN payer has the right to use the SDI account in the next quarter after submitting the application to the SRS (from January 1, April 1, July 1 or October 1).
When registering a new economic activity, the MUN payer can start using the SDI account from the day of obtaining the MUN payer status.
Source: iBizness