In November 2022 the European Parliament officially approved the Corporate Sustainability Reporting Directive. The EU member states, including Latvia, now have 18 months to pass the directive into their national law. This enactment is intended to improve the quality of available non-financial information, meet the needs of various stakeholders, and promote Europe’s joint transition to a more sustainable economy.
Our professional experience suggests that paragraph 3.3.2 of the Cabinet of Ministers’ Rule No. 802, “Transfer Pricing Documentation and Procedures for Entering Into an Advance Pricing Agreement Between the Taxpayer and the Tax Authority for a Transaction or a Type of Transactions”, which states that the taxpayer’s transfer pricing (TP) documentation should include financial information and tables showing how the financial data used in applying the TP method is linked to the financial statements, has taxpayers confused as a maze of legal interpretation.
2022 brought more turmoil to the Latvian economy, businesses and people. When it seemed that we had overcome one crisis and learned to live in the post-pandemic world, another crisis arrived, one that is still difficult to grasp. The Russian war in Ukraine, the energy crisis and the fast-growing rate of inflation make Baltic CEOs more pessimistic than they were a year ago about global and Baltic economic prospects, but they are more optimistic about their companies’ own prospects. They see the need for change and they are also thinking about the steps they need to get there, according to PwC’s Baltic CEO Survey 2023, which interviewed 323 CEOs in Latvia, Lithuania and Estonia.
PwC US has carried out HR Tech Survey 2022. We believe that MindLink.lv subscribers, too, might be interested in its findings, as they relate to one of the traditional corporate processes – human resources (HR), or more precisely, investing in HR technologies. HR technologies in this article mean IT systems that enable the recording of HR processes, such as vacations, time sheets, training courses, hiring and firing. The survey interviewed 688 HR leaders, who answered questions about their technology challenges and achievements. The full survey is unfortunately restricted to the US market, but a summary offering many valuable insights is available here. This article explores what we see as key findings.
Pillar Two is a tax scheme that will be applied in the EU and OECD countries in addition to their national corporate tax systems. This was developed to make multinational enterprises pay a minimum 15% tax in their home country on income arising in each country they operate in.
The mergers and acquisitions (M&A) space is justifiably perceived as one of the indicators of economic activity – greater interest in acquiring, merging and investing in companies means more dynamic development of the economy. Compared to recent years, 2021 set a record in terms of number and volume of transactions (up by 48% in the Baltic States) but 2022 saw a slowdown in M&A activity because of geopolitical turmoil. Some transactions are still taking place, while others are put on hold, and the business community is preparing for times that will bring more certainty and stability. Since a successful M&A transaction needs preparation, this is a good time to do the homework while considering the next cycle of economic activity.
Thanks to the considerable interest in PwC Academy’s introductory lecture in November, which offered an overview of the content of PwC’s Digital Academy (still available as a video recording), in January PwC’s Digital Academy Latvia launched a series of three webinars for managers, accountants, bookkeepers and everyone who works with data, reports and standard processes on a daily basis.
We are happy to share with our MindLink.lv readers the topics we discuss in our webinars.
In our article of 27 September 2022 we explored what Power Query is like and why we should use it, as well as giving a brief overview of what the tool offers. This article explores how we can benefit from using Power Query to compare data, because participants of PwC Digital Academy Latvia’s upcoming webinar on 23 February will have the opportunity to find out how they can set up templates in practice for comparing various types of data.
Dropping all the hype about the Great Resignation and stiff competition for talent, we invite you to look at investing in your people from a few rational down-to-earth perspectives. Based on a number of PwC surveys, you might end up finding a good argument in your budgeting process in favour of investment initiatives targeting your people.
The business community keeps asking questions about restrictions imposed by the sanctions and how this affects doing business with existing and new clients in the future. The EU has adopted a number of sanctions packages since Russia invaded Ukraine on 24 February 2022. This article explores the eighth package launched on 6 October.
In March 2021 the European Commission passed a proposal for a new directive aimed at putting mechanisms in place that will help employers provide equal pay for men and women. According to the draft directive, the pay disparity is still about 14%. Inequality becomes evident when we convert this percentage into days: compared to men, women actually have to work 51 days a year without pay. The main aim of the new rules is to minimise gender inequality in pay. While gender equality is a topic that has been discussed in public at length, statistics do not give us a reason to believe a balance has been achieved on the issue of pay. To achieve this, the European Commission has come up with new solutions that will mean new statutory obligations for employers.
We informed our MindLink.lv subscribers some time ago that the State Revenue Service (SRS) is increasingly exercising its statutory power to demand that a company’s overdue taxes be recovered from its board member if the tax debt cannot be recovered from the company. This article explores how we successfully resolved a court case to release a construction company’s former CEO (a client of ours) from the company’s tax debt of close to EUR 150,000.
Several EU member states are taking the taxation of employee share ownership plans in startup companies a step further. Their national rules make share plans far more attractive to startup employees and provide a more founder-friendly environment. While the rules aim to ensure startups give their employees a stake in the company, there are many solutions countries can use to achieve this goal.
As stated in the conclusion of the first instalment of this article, foreign markets offer various litigation funding models. In addition to the model we analysed before, where the claimant’s litigation is funded by an institutional litigation funder – an investment fund specialised in litigation funding, in this article we are looking at available alternatives. This overview covers some of the less familiar and sometimes unusual sources of litigation finance whose successful use would reduce the number of cases where a lack of finance limits the legal remedies available to a litigant.
The rules for implementing the aid programme “Financial instruments for encouraging digital transformation of businesses” under the EU Recovery and Resilience Facility came into force on 5 July 2022. The programme is designed to encourage the digital transformation, development and revenue growth in businesses by supporting investment in digital information tools aimed at productivity gains. The aid is targeted at Latvian-registered businesses regardless of size. This article takes a closer look at the aid programme.
