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Rules that help improve cash flows arising from VAT in the COVID-19 emergency

Explore the latest COVID-19 tax, legal and economic response by territory
(134 countries)

Temporary residence permit and EU Blue Card: five differences (1/22/20)

28.05.2020
Open article
What is it that differentiates a temporary residence permit from an EU Blue Card? While both documents allow a foreign national to spend a certain period in Latvia, there are essential differences between them that need to be considered when choosing either of them. This article explores five key differences between the temporary residence permit and the EU Blue Card. Read more..
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Is VAT treatment in financial sector up for overhaul? (2/22/20)

28.05.2020
Open article
The VAT treatment in the financial and insurance (“F&I”) sector prescribed by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, which exempts F&I services without recovery of input tax on goods and services acquired for supplying those services, remains unchanged since 1977. Irrecoverable input tax causes extra cost to F&I players and their customers as well. Our experience suggests that the VAT treatment in the financial sector has been suffering from legal uncertainty and high administrative costs incurred in applying the VAT rules. The outdated definitions of services make it difficult for fintech companies to figure out how to claim an exemption. And there are no instruments to reduce the burden of irrecoverable input tax. This article explores whether the F&I sector is in for change. Read more..
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Corporate Income Tax Act application rules amended (3/22/20) (0)

28.05.2020

Passed

The Cabinet of Ministers’ amendments to Cabinet Rule No. 677 of 14 December 2017, Application of provisions of the Corporate Income Tax Act, were published on 7 May 2020. The Cabinet Rule prescribes how a non-resident entity should report income from real estate leases, explains the calculation of income for a permanent establishment, and adjusts the treatment of corporate reorganisations. Read more..

Suspension of business for failure to provide information requested by tax authorities (1/21/20) (0)

22.05.2020

Practice

The Taxes and Duties Act permits the State Revenue Service (“SRS”) under certain conditions to suspend a taxpayer’s business, for example, after finding that the taxpayer has evaded taxes or duties. The SRS has so far put an overly wide interpretation on their powers to restrict a trader’s business so substantially. The Supreme Court has recently issued an important interpretation. Read more..

Capitalisation of costs associated with entering into contracts and complex aspects of revenue recognition: putting theory into practice (2/21/20) (0)

22.05.2020

Practice

International Financial Reporting Standard (IFRS) 15 Revenue from Contracts with Customers effective from 1 January 2018 adds to and combines the revenue recognition principles that were covered by several international standards earlier. Entities have run into a number of problems when applying IFRS 15. This article explores some of the issues addressed for more than a year by the International Financial Reporting Interpretations Committee (“IFRIC”), who explains to executives and accountants how IFRS should be applied in certain cases. Read more..

Transfer pricing in financial transactions during crisis (3/21/20) (0)

22.05.2020

Practice

COVID-19 may have a wide range of adverse implications such as falling consumer demand, supply chain disruptions, and heightened risks in financial markets. The economic downturn may result in many companies within a multinational group having lower cash flows, so other group members may decide to lend to them or to revise the terms of their existing loans and help them ride out the crisis. This article explores key transfer pricing issues and risks associated with intragroup financial transactions, which are especially topical in the present emergency situation. Read more..

Tax authority’s guidance on topical VAT issues in emergency situation (1/20/20) (0)

15.05.2020

Practice

As we wrote earlier in the article “Tax solutions to deal with COVID-19 consequences,” both the VAT Act and the case law permit taxable persons to avoid adjusting their input tax deduction if they have acquired goods or services with VAT but for objective reasons have stopped doing business, implementing projects and supplying goods or services to their customers. This article explores guidance the State Revenue Service (“SRS”) published on 24 April to analyse VAT treatment in certain situations that many businesses are now finding themselves in. Read more..

 

 
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