The Taxes and Duties Act is among the pieces of legislation that have been amended the most in recent months. A number of important changes have been made to reviews facing taxpayers and ways of settling disagreements with the State Revenue Service (SRS).
In June 2023, Parliament passed two extensive amendments to the Taxes and Duties Act effective from 1 January 2024. This was followed by a publication on the website of the State Revenue Service (SRS) detailing the new system’s objectives and explaining the meaning of taxpayer grades.
Several sections of the Taxes and Duties Act define a taxpayer’s obligations. Section 15.2 requires the taxpayer to prepare a local transfer pricing (TP) file within 12 months after the end of the financial period and, depending on the circumstances, to submit it to the State Revenue Service (SRS) for the financial period:
Situation 1 – within 12 months after the end of the financial period; or
Situation 2 – within one month after receiving a request from the SRS.
This article is meant just for you if you are interested in learning more about a crucial relief in Situation 2. The taxpayer has the right to revise his local TP file every three years if he satisfies a certain condition and meets one annual requirement.
Amendments to the Taxes and Duties Act that require taxpayers to prepare and file a specified form of transfer pricing (TP) documentation with the State Revenue Service (SRS) took effect back in 2018, yet we had not seen any active enforcement steps from the SRS until the end of this summer, when several Latvian companies received an informational report on the submission of TP documentation via the SRS’s e-filing system (“EDS”). These reports imply that the SRS is checking the companies’ obligation to file TP documentation for 2020 and urging them to do so by the deadline stated in the report or to explain why they should not file TP documentation. This article reminds you of the TP documentation preparation and filing requirements and of the SRS’s activities in enforcing them, and we also suggest steps your company might take after receiving such a report.
We have written before about a taxpayer’s duty to file with the State Revenue Service (SRS) a multinational enterprise group’s country-by-country (CbC) report under section 15(9) of the Taxes and Duties Act or a statement of the reporting company and its tax residence. This article explores how to correctly disclose information in the statement in the case of a non-standard fiscal period.
Our experience suggests that taxpayers carrying out the obligation to submit transfer pricing (TP) documentation to the State Revenue Service (SRS) may suddenly find themselves in an awkward situation, as the functionality of the Electronic Declaration System (EDS) prevents them from uploading a screenshot file that supports their benchmarking study because of its size. So the document fails to reach the SRS and puts the taxpayer at risk of defaulting on statutory requirements for information to be included in TP documentation. This article offers a solution to this problem.
A company that suffers inventory loss has to forecast a shrinkage rate for the financial year. This may have corporate income tax (CIT) implications. Since the company is allowed to adjust its CIT return for the last month of the financial year without incurring late fees before it files its annual accounts, this article explores the CIT treatment of inventory loss.
The State Revenue Service (SRS) is increasingly exercising its statutory power to have a company’s board member pay an overdue tax liability if that debt cannot be collected from the company. For the board member this often means thousands of euros to pay, private accounts blocked, and properties seized. This article explores the legal grounds for such actions and outlines substantial errors in decisions made by the SRS.
The Court of Justice of the European Union (CJEU) has examined a question that often faces Latvian taxable persons. May an excessive price of advertising services and the fact that they are not clearly necessary for the company’s business give the tax authority grounds for denying a deduction of input tax on the advertising expenses? This article explores the court findings and their practical implications.
A litigation and dispute resolution lawyer’s clients often prefer to avoid arguing with the authorities in the hope of building a relationship or performing an obligation, even one that has no basis in law. From a strategy perspective it is sometimes useful to concede a small point in order to secure a bigger gain, such as time or progress. And unreasonably complaining right and left is not considered good style. However, you should not be afraid to speak up where this is necessary and to engage in a meaningful discussion with the authorities when it makes sense. The government is not a small child who will take offence and seek revenge at the first opportunity. Below is a story of successful communication with two fairly bureaucratic government agencies: the State Revenue Service and the Citizenship and Migration Office.
The autumn sees the State Revenue Service (SRS) sending requests to taxpayers for information on transactions making up their bank account turnover and discrepancies with the information available to the SRS. This article explores the process and practical communication with the SRS (more details in “Bank account turnover out of line with tax filings”).
Transfer pricing (TP) rules laid down by section 15.2 of the Taxes and Duties Act effective from 1 January 2018 require that a taxpayer’s master file and local file, or only his local file, provide evidence that the TP applied in a related-party transaction (the “controlled transaction”) is arm’s length. Although there is no publicly available information about amounts the State Revenue Service (SRS) has charged for the lack or incompliance of TP documentation/ analysis of controlled transactions over the last three years, we are aware that those are being evaluated, mainly as part of the “Advise First!” principle, as we have written earlier. This article explores common substantial errors in TP documentation pointed out by an SRS official who attended a seminar the Latvian Chamber of Commerce and Industry organised in May 2021.
Proposals for amending the Company and Consolidated Accounts Act (the “CCAA”) were announced at the meeting of state secretaries on 12 August 2021. Although the proposals are still to be debated by the Cabinet of Ministers and need parliamentary approval, certain amendments would apply when preparing financial statements for 2021.
Tax resident status prescribes a personal income tax (PIT) liability on your worldwide income in your tax residence country. You should carefully assess your tax resident status to avoid potential double taxation, if the tax authorities of two countries treat you as their tax resident.
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First North is a growth market designed for ambitious small and medium-sized companies in the Baltics. Being a Certified Adviser permits PwC to guide growth companies in Baltics through the Firth North application process and ensure they meet all the market’s requirements on a continuous basis.
Eiropas Parlaments pagājušā gada novembrī oficiāli apstiprināja Korporatīvās ilgtspējas ziņošanas direktīvu jeb CSRD (Corporate Sustainability Reporting Directive). Šobrīd Eiropas Savienības dalībvalstu, t.sk. Latvijas, rīcībā ir 18 mēneši, lai šo direktīvu pārņemtu savos tiesību aktos. Šādi iecerēts uzlabot pieejamās nefinanšu informācijas kvalitāti, nodrošinot uzņēmumu dažādo ietekmes pušu vajadzības un veicināt kopējo Eiropas pāreju uz ilgtspējīgāku ekonomiku.
Šajā PwC Nodokļu podkāsta epizodē PwC Latvija ilgtspējas pakalpojumu vadītāja Maija Orbidāne skaidro, kādas ir šīs direktīvas prasības, kā tas ietekmēs uzņēmējus Latvijā un kādi ir laicīgi veicamie mājasdarbi šajā sakarā.