Latvian President Edgars Rinkēvičs proposes to imposes exempting employers in the country from payroll tax when it comes to providing employees with monetary aid for the purchase of medicines, said the President’s advisor Mārtiņš Drēģeris.
On Tuesday, the 3rd of December, Rinkēvičs signed and sent to the Saeima Praesidium amendments to the Law on Personal Income Tax, proposing aforementioned changes.
The proposed amendments provide that the payroll tax would not be levied, accordingly applying also the exemption from mandatory state social insurance contributions, and the assistance granted to an employer’s employee or his or her dependent person in cash for the purchase of medical technologies would be exempted from personal income tax.
Drēģeris mentioned the term used in the legislative draft “medical technologies”, in accordance with the definition provided in the Medical Treatment Law, means medical methods, medical devices and medicinal products.
In his letter to the Saeima Praesidium, the President wrote that many Latvian residents experience financial difficulties,
when it comes to purchasing necessary medicines. This is especially true for patients suffering from rare and severe diseases, as medicines for them are usually very expensive and have to be taken for a long period of time.
He points out that difficulties in ensuring the availability of medicines can prolong the recovery, which also affects the availability of the workforce and labour productivity, while the care of dependent persons can affect the ability to fully integrate into the labour market.
In the opinion of the President, one of the ways to help people overcome difficulties and, consequently, maintain the workforce resource, is to motivate employers to voluntarily help their employee or his or her dependent to cover the costs of medicines.
Rinkēvičs also emphasized that the current legal framework does not encourage such motivation, as possible financial support from the employer to the employee for the purchase of medicines is subject to taxation.
The aim of the draft law is to promote voluntary involvement of employers in ensuring the availability of expensive medicines, including innovative medicines, as well as other medical technologies in accordance with international clinical guidelines for their employees or their dependents in cases where the state does not reimburse or only partially reimburses the costs of purchasing medicines or other medical technologies.