As stakeholders increasingly expect organisations to demonstrate their commitment to sustainable and ethical operations, organisations are relying on innovative digital tools to make it easier for them to achieve their sustainability goals. Electronic invoicing (e-invoicing) is one of such tools. While e-invoicing may seem a merely technical function, it has a surprisingly important role to play in the sustainability space, helping organisations improve their sustainability and strengthen their governance.
For over a year we have been living with the new system the State Revenue Service (SRS) uses for checking individuals and entities. Amendments to the Taxes and Duties Act outline a different approach to tax administration aimed at simplifying and improving current checks in favour of the individual. This approach provides for only three stages: enquiry (obtaining information), tax control, and audit. These are not always consecutive steps and there may be different combinations. For example, enquiry can go straight into audit, tax control can move into audit, and enquiry may well end your communication with the SRS. Our experience suggests that carefully preparing your response to an SRS information request can reduce their interest in you and prevent the enquiry stage from changing into a more serious tax review.
In September 2024 the Court of Justice of the European Union (CJEU) definitively ruled on the case involving the European Commission (EC) against Ireland and Apple. The CJEU confirmed that Ireland’s two tax measures allowed Apple to use transfer prices in its intragroup transactions that were not arm’s length, constituting illegal state aid under Article 107(1) of the Treaty on the Functioning of the European Union (TFEU). Apple enjoyed tax advantages over the period from 1991 to 2014 and must now repay EUR 13 billion in unpaid taxes to the Irish state. This is the largest amount of illegal aid in history to date.
The rapid evolution of artificial intelligence (AI) and machine-learning technology has led to their increased use in tax administration across Europe and in Latvia. The adoption of AI has proved to be particularly effective, helping tax authorities prevent tax discrepancies and fraud, improve taxpayer experience and increase the effectiveness of internal processes. This article explores various recent examples of how AI is used to improve tax administration and boost tax revenues in Latvia and elsewhere in Europe.
Tax evasion is a global problem that seriously threatens the stability of national economies and breeds social inequality. According to the OECD, the tax gap amounts to hundreds of billions of dollars that governments fail to collect each year. This failure limits the affected country’s ability to finance key social and economic projects and increases inequality in society. To address this problem, more governments are adopting digital solutions, including e-invoicing, which helps them improve tax compliance and minimise tax evasion.
In early 2024 the State Revenue Service (SRS) published an advance tax ruling issued to a foreign company’s permanent establishment (PE) in Latvia, in which the SRS assessed the PE’s relationship with its foreign head office and explained whether the PE is liable to prepare and submit a transfer pricing (TP) file for their mutual transactions. In this article we outline what the tax ruling says about PE status, examine Latvian TP rules on documenting relationships and TP, and offer a theoretical example to explain the PE’s obligation to document TP in practice.
‘Don’t hire yourself!’ is a campaign-like slogan resonating loudly across the Nordic countries this autumn to warn employers against giving in to the temptation to hire only people like them and to encourage them to cast their net wider for the talent they need. This article highlights the manifestations and consequences of bias in candidate selection, puts forward arguments for recruitment that is open to diversity and inclusive in the light of the latest EU demographic trends, and makes specific recommendations for guidelines and activities in the recruitment process.
Data is hugely significant in the business world, yet its true value lies not only in volume but also quality. Bad data can hinder your business growth and lead to wrong decisions and missed opportunities. This article explores the practical aspects of data quality management to help you discover the true potential of information and make decisions based on data that is reliable and accurate.
A participation budget allows the public to directly influence the spending of some of the municipal revenues generated by taxes paid by municipal residents. You can take part in planning the development of your municipality and realise your own ideas.
The practice of devising and publishing a tax strategy is gaining traction in companies to handle their internal governance and external relationships with the general public and government agencies. To continue our article on the link between tax and sustainability, we will discuss how certain countries require companies to draw up a tax strategy.
Today’s business often spreads across several countries, making it difficult to tax business income properly. A key challenge for companies is to determine whether they have a permanent establishment (PE) abroad. The situation is complicated further by countries possibly applying different PE criteria and interpreting PE rules in their double tax treaties differently.
Much of the acquisition cost in a share deal tends to be financed externally, i.e. by borrowing. Repayment of a shareholder’s loan is typically exempt from corporate income tax (CIT) under Latvian law (more details in our article CIT reform: lending to related parties). Also, if interest paid on the shareholder’s loan complies with Latvian thin capitalisation rules and transfer pricing rules and is used for business purposes, i.e. it qualifies as a business expense, the interest charges are exempt from Latvian CIT.
