Customs Union: new action plan approved (3/42/20)
15 Oct 2020
On 28 September the European Commission announced a new action plan for the Customs Union aimed at making EU Customs smarter, more innovative and more efficient over the next four years. This article explores how these measures are to strengthen the significant role the Customs Union has to play. Read more..
Ways of utilising tax losses arising before 2018 (2/41/20)
9 Oct 2020
While the current corporate income tax (“CIT”) regime no longer recognises the concept of tax loss, the transition rules of the CIT Act allow companies to deduct tax losses arising before 2018 from the CIT charge on dividends, but this relief is available up to 2022. Let’s explore some aspects to consider before you can claim it. Read more..
Single tax account and changes to income tax payment and employer reporting procedures in 2021 (3/41/20)
9 Oct 2020
To ease the administrative burden, all national budget payments administered by the State Revenue Service (“SRS”) will go into a new single tax account replacing the current tax accounts from 1 January 2021. The Cabinet of Ministers’ Rule No. 827 and the Personal Income Tax (“PIT”) Act will be amended to set new deadlines for paying PIT and national social insurance (“NSI”) contributions and filing employer reports. This article explores the expected changes and key amendments. Read more..
Proposed changes in personal taxation from 2021 (3/40/20)
2 Oct 2020
On 2 September the Cabinet of Ministers debated an informational report prepared by the Ministry of Finance (“MOF”) on how to develop future tax policies that would promote Latvia’s social sustainability and economic competitiveness. The report identifies a number of issues in the tax system, which are to be resolved by a number of tax policy changes in 2021, 2022 and 2023. This article explores how the MOF proposes to change the rates of mandatory national social insurance (“NSI”) contributions, personal income tax (“PIT”) and solidarity tax, as well as income-differentiated personal allowances from 2021. Read more..
How to utilise old profits free of corporate tax (1/39/20)
24 Sep 2020
Companies having large pre-2018 retained earnings available for distribution in dividends free of corporate income tax (“CIT”) are at an advantage because CIT costs can be reduced not only on profit distribution but also in other cases. This article explores some additional ways of utilising the “old” profits and mentions a few points to consider. Read more..
Is payment for early termination of contract subject to VAT? (1) (2/39/20)
24 Sep 2020
Compensation for loss is not subject to VAT but how do we know whether the amount that becomes payable if the customer terminates a fixed-term service contract through their fault, is a contract penalty, compensation for loss, or consideration for services? In their guidance “VAT Treatment: Questions and Answers” the State Revenue Service (“SRS”) explains that VAT is not charged on a contract penalty, down payment, deposit or compensation unless this is consideration for a supply of goods or services. This article explores two rulings in which the Court of Justice of the European Union (“CJEU”) explains how to assess whether compensation received is essentially consideration for services. Read more..