Over the last six months I’ve been comparing the information technology (IT) inventory in a number of Latvian companies with their global industry peers. PwC makes a comparison in the course of developing a company’s IT strategy or assessing its digital transformation maturity. For comparison purposes we use similar corporate indicators gathered by the American Productivity & Quality Center, a leading global authority, and surveys of IT practices in various industries. The results show a systemic trend.

On 24 May 2024 the Finance Ministry launched a public consultation on proposals for amending the Accounting Act that require invoices to be prepared as structured electronic invoices. Latvian companies invoicing state-funded organisations will have to use structured electronic invoices from 1 January 2025. Other companies will be covered from 2026. This article explores the early proposals for implementing e-invoices in Latvia.

In today’s rapidly changing world, organisations need to be proactive to stay competitive and they also need to regularly assess potential business risks and opportunities. When it comes to assessing risks and opportunities, businesses often opt for enterprise risk management – the culture, capabilities and practices an organisation integrates with setting a strategy and applies when it carries out that strategy, with the purpose of managing risk in creating, preserving and realising value.

The International Internal Audit Standards Board has been working for several years to update and improve the current international standards for the professional practice of internal auditing to promote the profession’s evolution and internal audit quality and to provide added support for internal audit functions facing ever-changing external and internal risks. This work resulted in the updated and improved international internal audit practice standards being published on 9 January 2024 and coming into force on 9 January 2025. This year, all internal audit functions have time to assess their compliance with the new standards’ requirements and to identify any necessary improvements. We believe this is a great opportunity to make long-term changes to your internal audit function and help it provide even more significant support in achieving your organisation’s goals.

Taxpayers sometimes report an operating loss at the end of the financial year. The State Revenue Service (SRS) perceives this as a key risk that gives grounds for launching a control measure, particularly for taxpayers within a multinational group, citing the transfer pricing (TP) impact on profitability as the main cause of the loss. This article discusses the idea that losses may have an objective economic justification and other legitimate business strategy reasons, with associated risks materialising in the financial year, as well as looking at ways to offer explanations and dispel the myth that TP is the cause of the taxpayer’s operating loss.

On 8 May 2024, the EU Council published updated proposals for amending the VAT directive (known as VAT in the Digital Age – ViDA). The amendments are to be passed at an ECOFIN meeting on 21 June 2024. It’s likely that the original deadlines will be postponed and the member states will have to pass some of the amendments into their national laws by 1 July 2027, some by 1 July 2028 and some by 1 July 2030. This article explores key changes and the timeline.

Coming into force on 1 July 2024, the Latvia–Moldova social security agreement will help the two countries work together in this field by defining how pensions, government benefits and insurance claims can be awarded and paid to persons living in Latvia and Moldova. The agreement also governs the payment of national social insurance contributions on income arising in these countries and dispenses with the need to contribute in both. This article describes how the agreement was reached and explores its key terms that are relevant to every Latvian individual that has economic or social ties with Moldova, as well as to Latvian businesses employing or planning to employ workers from Moldova after June 2024.

Today’s business environment sees many companies entering into contracts with foreign partners that often involve the agreed work being carried out abroad. PwC Latvia tax director Vita Sakne and senior associate Elizabete Lizete Lapsina explain the circumstances and issues arising when a company doing a long-term construction or installation project across several jurisdictions may be liable to register a permanent establishment.

This article explores a court ruling that was issued after a review by the State Revenue Service (SRS) found that invoices a company had expensed in its books did not meet requirements of the Accounting Act. A tax audit found the invoices do not qualify as supporting documents because no services were provided in exchange and the invoices were prepared incorrectly. The company faced an additional corporate income tax (CIT) liability of more than EUR 5 million.

Many taxpayers that have wrongly paid some taxes into the single tax account, made an overpayment or adjusted their liabilities will see an amount under ‘Unallocated Payments’ in the Electronic Declaration System. We asked the State Revenue Service (SRS) when such unallocated amounts expire.

Whistleblowing is not a novel concept in the European Union (EU) so it’s not related to sustainability alone. However, the latest sustainability legislation enhances the significance of whistleblowing and the need to protect whistleblowers. This article explores how a whistleblowing system can drive sustainable growth in organisations.

Every five years or so, each information technology (IT) officer looks back at performance and builds a new corporate IT strategy. A benchmarking study that involves comparing your current IT governance parameters with similar companies is an integral part of strategic planning. Comparable parameters (e.g. IT costs per user or per euro earned, the percentage of technology maintenance costs in total technology costs, or the number of computer hardware units to be serviced per specialist full-time equivalent) depend on the database you’re using, they’re easy to understand, and selecting them raises no questions.

Whether a taxable person transfers a business or makes a contribution in kind in exchange for shares, this is typically treated as a transaction outside the scope of VAT. However, the Latvian VAT Act does not resolve this issue conclusively, and this assumption comes from a logical assessment of the rules that require adjustment to input VAT deduction. The latest case law of the Court of Justice of the European Union (CJEU) has weakened the impression that a contribution to share capital is always a supply outside the scope of VAT. This article explores a recent CJEU ruling.

One day I tried out Copilot for Microsoft 365 and realised this GenAI tool isn’t going to replace me at PwC but it will certainly change my daily life. PwC Latvia has been a Microsoft partner since last Christmas, and I’ve been encouraging Latvian companies to test Copilot’s capabilities. Each company can come up with its own scenario and see how it can benefit from using GenAI. It’s important that your company has its own task where it expects added value from GenAI. It wouldn’t be right to use the technology ‘unattended’ and laugh about images it generates with two-headed persons or about Neil Armstrong being hailed as the first astronaut. Below I offer my scenario and findings.

We have written earlier about the State Revenue Service (SRS) pointing out significant errors in transfer pricing (TP) files and focusing on the lack of financial data segmentation, the tested party or its financial data, and the benefit test (i.e. evidence of services). This article explores some other common breaches.