Flash News offers the latest information on current tax, accounting, legal and other business issues.
Central and local government agencies have been required to create accessible Web content since 2016. This is prescribed by Directive (EU) 2016/2102 of the European Parliament and of the Council of 26 October 2016 on the accessibility of websites and mobile applications of public sector bodies passed in 2016. However, studies suggest that it’s still very difficult for people with disabilities to access information in the way they need. For example, in August 2024, having surveyed 15 websites run by central and local government agencies, the Ombudsman found that none of them is fully accessible to people with disabilities. In this article we will explain what accessibility is and why it’s important for businesses, as well as exploring the essence of accessibility to digital resources and services, the rationale, legislation, practices and recommendations for providing accessibility successfully.
As part of adopting the yearly national budget, Parliament passed several key tax amendments in their final reading on 4 December 2024, which are in force but will apply from 1 January 2025. In this article, we look at the most important changes affecting people and businesses, with changes to personal income tax (PIT) and other taxes.
On 31 October 2024 Parliament passed the State Revenue Service (SRS) Act and the Tax and Customs Police Act (the ‘Police Act’) in their final reading to separate the Internal Security Board and the Tax and Customs Police Board from the SRS. These legislative changes will carry out the Ministry of Finance’s (MOF) intention of reorganising the SRS to carve out investigatory and operational functions. The new legal framework will result in the SRS being only tasked with the provision of advice, support and services in the field of tax and customs.
In the digital age, with technology becoming the basis for business process transformation, the synergies between e-invoicing and AI offer great potential for improving efficiency, accuracy and compliance. Yet the rapid evolution of AI technology increases the need for a clear set of rules to secure ethical practices and data protection. In this article we look at how the integration of e-invoicing and AI technology changes business operations, what the main challenges are, and what aspects organisations need to consider when adapting to the evolving regulatory environment.
Claiming tax relief under a double tax treaty between two countries is an integral part of day-to-day practice for many Latvian taxpayers. A key condition for taking relief is a foreign residency certificate approved by the State Revenue Service (SRS). While in general cases a residency certificate is approved for five years, there are situations where the SRS challenges another country’s residency certificate for compliance with national criteria. For example, the Latvian Supreme Court has recently ruled on an SRS decision to approve a US residency certificate for only three months because the SRS believed the conditions for a five-year period had not been met. In this article we explore the Supreme Court’s findings and answer the main question of whether the SRS decision was justified.
In an earlier MindLink article we wrote about proposals for amending the value added tax (VAT) framework. The proposals mandate e-invoicing in cross-border transactions and require changes to how EU sales lists are completed. The proposals also place responsibility for collecting VAT on platforms through which transactions are made in the accommodation and transport sector, and the one-stop shop (OSS) scheme is to be expanded.
A recent ruling from the Court of Justice of the European Union (CJEU) addresses the VAT treatment of electricity supplied to users of electric vehicles (EVs) through a third-party network. The original proceedings involved a German company contesting the Swedish tax authority’s decision on electricity supplied in Sweden. The CJEU ruling emphasises clarity in VAT treatment and reinforces adherence to the VAT framework. In this article, we summarise the key arguments and facts the CJEU considered in its ruling.
Having a network of double tax treaties (DTTs) helps countries work together when it comes to taxes, as DTTs aim to prevent the double taxation of income earned by individuals or companies doing business in two or more countries. As for the latest developments in international taxation, in this article we will take a closer look at the technical aspects of the most-favoured-nation (MFN) clause, which is found in just a few DTTs and from October 2024 has been implemented in the DTT between France and Latvia. We will also look at the significance of the MFN regime for French companies wishing to expand their operations in Latvia.
Transfer pricing (TP) documentation is necessary for companies doing business with related foreign companies to demonstrate that prices applied in their transactions are arm’s length. The preparation of TP files can be either centralised or decentralised. Each approach has its advantages and disadvantages, and the choice between them depends on the structure and specific needs of the group. In this series of articles, we will look at the pros and cons of the two approaches, which you need to consider when it comes to selecting the best approach to preparing your TP documentation.
October 27 was the last day of a public consultation on proposals the Ministry of Economy (MOE) has drawn up for amending the State Aid for Startup Operations Act. The proposals delete references to the de minimis aid rule and authorise the MOE to enter into participation agreements with organisations representing startups to simplify the process of awarding EUR 400,000 in state aid. This article explores what we see as key changes.
Europe has been looking for ways to improve its gender equality indicators in recent years, including the pay gap between men and women and their participation in top management. One of the latest initiatives provides for securing a gender balance on the boards of listed companies. In this article, we explore these changes because the new rules apply to Latvia too.
The role of employer image in attracting and retaining talent is becoming more and more important. However, the dynamics of trust are changing, with people putting more stock in personal suggestions and recommendations, as clearly demonstrated by social media. The same message on a company’s social media and an employee’s private profile will have a different tone, reach and contribution. On average a personal post created by an employee can achieve a level of engagement twice or three times as much as a corporate post, thanks to personal contacts and more trust.
On 30 September 2024 the Latvian Supreme Court issued Ruling No. A420226518 after hearing a Latvian company’s appeal against a decision from the State Revenue Service (SRS) and a ruling from the Regional Administrative Court. The dispute was over the results of a tax audit that questioned the company’s right to deduct input VAT when acting as intermediary in cross-border transactions. The SRS viewed the transactions as fictitious because the original seller (two unrelated Latvian companies) and the end buyer (a related Lithuanian company) had allegedly entered into a secret agreement. The SRS said the company was aware of that agreement and engaged in documenting the transactions as an intermediary to reduce the amount of value added tax (VAT) and corporate income tax (CIT) payable to the government.
The integration of e-invoicing into your finance function can significantly improve its efficiency and accuracy. However, this digital development brings with it some new risks, particularly in the area of fraud. The growing role of technology in financial transactions causes organisations to strengthen their security systems and focus on modern fraud detection solutions. In this area, artificial intelligence (AI) has become a crucial tool that provides organisations with advanced methods for detecting, preventing and minimising fraud. In this article we explore how AI can detect fraud in e-invoicing systems and how organisations can benefit in practice.
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 early 2024, Parliament amended the National Cadastre Act to change how cadastral values of real estate (RE) are set from 1 January 2025. Two cadastral values will be calculated and recorded for each cadastral item on a temporary basis: fiscal and universal. Fiscal value will be equivalent to the current cadastral value and used to assess real estate tax (RET) and other duties. Universal value is to be used in accounting records, financial statements and land rent calculations.
Passed by the Latvian parliament on 31 October 2024 in their final reading, amendments to the Accounting Act require Latvian invoices to be issued as structured electronic invoices (‘e-invoices’). These changes will apply to all businesses when invoicing government agencies (B2G) from 1 January 2025. E-invoicing will become mandatory between businesses (B2B) from 1 January 2026.
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.
We have read conflicting opinions from the State Revenue Service (SRS) on how financing from the State or EU funds affects value added tax (VAT). Persons receiving such funding should consider this issue carefully and may have to seek SRS approval for VAT treatment. To help you navigate this complexity, we will offer some guidelines based on the assessment made by the Court of Justice of the European Union (CJEU) in its ruling C‑87/23 of 4 July 2024. The case involves a dispute between the Latvian Information and Communications Technology Association (LICTA) and the SRS.
Amendments to the Accounting Act will mandate the use of structured electronic invoices or e-invoices between businesses and government agencies (B2G) from 2025 and between businesses (B2B) from 2026. The amendments introduce structured e-invoices that will significantly change the accounting and payment processes in organisations. To ensure a seamless transition to e-invoicing and to avoid misunderstandings or conflicts, organisations will have to amend their business contracts. In this article we will look at key aspects and contractual amendments that are necessary to meet the new requirements and guarantee a smooth exchange of e-invoices.
The growing job market requirements both locally and globally are forcing employers to identify HR policy improvements capable of attracting and retaining today’s workforce. Yet strategies for attracting talent, adopting GenAI tools, understanding and satisfying workers’ needs are only the tip of the iceberg. With increased challenges to reduce staff turnover and create an inclusive and growth-oriented working environment, organisations should be putting more effort into identifying the current market trends and building their value proposition. In this article we will present the findings of ‘Workforce Radar’, a PwC US study of organisations across the PwC network, and the findings of ‘Hopes and Fears 2024’, a PwC survey of more than 20,000 employees, business leaders and HR leaders.
In August we wrote about the State Revenue Service’s plans to begin sending out notifications in September asking people to review their income and report it in full. This is one of the steps the SRS is taking as part of the plan to fight the shadow economy. In this article we will look at how this initiative is happening in practice and what is worthy of attention.
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.
