The current economic challenges, such as high inflation, scarce resources and pressures to increase profitability, continue pushing businesses towards a global dilemma: either motivate your workers to stay on with a pay rise and then say goodbye to your profit, or cancel your plans for higher pay and perks and then lose skilled workers. This dilemma might have you looking for some more efficient types of employer’s financial support with a low or no tax burden, such as non-taxable fringe benefits. This article offers an overview of exempt fringes and other useful tools employers can use to support their workers in the Baltic States.
The world has changed magnificently over the last 100 years as technological progress and democratic principles have made society more open-minded, tolerant and equal. As these things move forward, there are still social challenges that need to be taken care of. The gender gap remains a relatively stable phenomenon to this day, even though females have gained equal rights with males. In 2010, social entrepreneurs established The EQUAL-SALARY Foundation, a non-profit organisation, to fight for pay equity around the world. In words that are easy to understand, the Foundation presents data from the International Labour Organisation’s Global Wage Report 2018/2019, which states that globally women are paid 20% less than men on average. In the light of publication of the EQUAL-SALARY Foundation’s annual report, we summarise key takeaways.
The rapid evolution on a global scale leads to changes in all areas of life. What was once seen as something new and innovative has now become a standard, or it’s out of date already and in for a change. The evolving business environment entails changes to the workplace and workers’ needs, which means new challenges for employers. Diversity of benefits available to employees is becoming a key factor in assessing the workplace. According to statistics, activities promoting diversity of benefits have a positive effect on any company’s economic activity and worker productivity. Especially during the post-pandemic period, we could see employees expecting from their employers a package of benefits that’s flexible and tailored to their needs. We have written before about the advantages of flexible reward schemes. In this article we are looking at a new technology solution that will help companies improve their benefits packages by tailoring those to the desires of their employees.
Employee stock ownership plans are becoming increasingly popular as a way to boost staff motivation in companies around the world, including the Baltic States. The popularity of stock options is due to how they benefit both the company and the employee. Stock options give employees the right to receive or buy shares in their company after a specified period and for a price below the market value. The company benefits by having employees who are willing to work towards its goals and increase its stock value. Since the national rules for taxing this fringe benefit vary from country to country, it’s important to review the tax laws of Lithuania, Latvia and Estonia.
Globalisation means it’s common for companies to have their corporate clients and various procurement projects in countries other than their main place of business. To properly benefit from foreign procurement projects, it’s important to assess not only the benefits but also risks associated with such business opportunities, particularly tax risks. If your company has a permanent establishment (PE) in a foreign country, it’s important to be aware of the corporate income tax and payroll tax implications of operating there. In this article, we take a look at employment tax risks and key issues to consider.
In Latvia the rights and obligations of taxpayers and tax authorities, including the SRS, are prescribed by the Taxes and Duties Act and the State Revenue Service Act. Under this legislation, the primary onus is on the taxpayer to compute and pay their taxes to the government.
We have written before about the corporate income tax treatment for the acquisition and maintenance costs of an electric vehicle (EV). Yet employees often charge their corporate EVs at home. This article explores how a company could reimburse an employee’s electricity costs.
On 18 April 2023 the Supreme Court ruled on case No. A420131521 concerning the classification of non-business expenses for corporate income tax (CIT) purposes, application of the concept of labour lease, and additional taxes charged by the State Revenue Service (SRS) in the construction sector, where subcontracted labour was used. By its ruling the Supreme Court refused the company’s request for reversal of the SRS’s decision, which remains unchanged and has taken effect. We feel MindLink subscribers should become familiar with this decision by which the SRS charged CIT and national social insurance (NSI) contributions, as well as a late fee and a penalty. For personal income tax (PIT) purposes, only a penalty was charged.
This statement does not seem to make sense and is contrary to what the law says about capital gains tax being payable only on income that results from a disposal of real estate (RE). However, a certain taxpayer had to fight in court for his right to be exempt from a tax liability on an RE disposal.
During the pandemic, Latvian companies faced unprecedented challenges around remote working, when the entire corporate culture came up for overhaul. The biggest challenges arose from the need for flexibility as the traditional eight-hour working day at the office was upgraded with the option to connect remotely at the employee’s convenience. Some companies cancelled the full-time office presence requirement altogether and set up alternative working arrangements with variable hours, places and conditions. Flexibility became a key aspect in keeping employees motivated and loyal. This article explores the rapid development of flexible reward schemes.
Sole traders were exempt from making advance personal income tax (PIT) payments in 2020, 2021 and 2022 after tax aid measures were adopted under section 6 of the Covid-19 Act. According to the current rules and the information published by the State Revenue Service (SRS), sole traders would have been required to resume advance PIT payments in 2023, with the first payment due on or before 23 March. However, proposals were submitted on 3 March to extend the deadline for another year.
In 2021 we wrote about the European Commission’s draft regulation on artificial intelligence (AI) whose rules on AI systems include a risk-based approach. This means that any AI systems that are recognised as unacceptable risk systems are not permitted in the EU at all. For high-risk AI systems the draft regulation lays down stringent conditions that must be met before they can be distributed in the EU market. While preparations are being made for applying the AI regulation, in September 2022 the Commission presented a draft directive on non-contractual AI liability rules (the “draft liability directive”), which together with the draft AI regulation and AI product safety rules will create a framework for distributing AI systems in the EU market. This article explores what the draft liability directive requires of companies wishing to distribute AI systems on the market.
The Electrical Energy Tax Act and the Cabinet of Ministers’ Rule No. 52 of 24 January 2017, Procedures for Applying Electrical Energy Tax Exemptions, have been amended with effect from 1 January 2023. Key amendments relate to exemptions on electricity that directly ensures the production of electrical energy.