The Finance Ministry has come up with a number of proposals for amending the VAT Act from 2024. The goals are to improve the VAT rules by exempting VAT on services that are closely linked to sports, to minimise the administrative burden, to encourage improvements to the business environment, and to revise the conditions for how registered taxable persons can adjust input tax paid on bad debts. The proposals must be approved in their second reading by Parliament before they can take effect. This article explores what we see as key changes to the VAT Act.

We have informed our MindLink subscribers that in late 2022 the European Commission (EC) published proposals for amending the VAT directive (2006/112/EC) and Council Implementing Regulation (EU) No. 282/2011 to upgrade the EU VAT system and increase its resistance to fraud. Known as ‘VAT in the Digital Age’ (ViDA), the EU VAT reform aims to modernise and simplify the VAT rules for platform economy members by introducing mandatory real-time digital reporting and e-invoicing for all intra-Community B2B transactions. This article explores the latest developments and the potential reforms, focusing on e-invoicing practices.

The State Revenue Service (SRS) has so far conducted several types of review to examine a taxpayer’s tax payments for compliance with statutory requirements.

Under the Civil Code, a gift is a legal transaction whereby someone gives an asset to another person for free out of generosity. While a gift is mainly associated with something pleasant, there may be risks and questions – read on to find out more.

The European Sustainability Reporting Standards (ESRS) require organisations governed by the Corporate Sustainability Reporting Directive to carry out a dual materiality assessment aimed at identifying environmental, social and governance (ESG) areas that are material to them. Unlike the previous practice, which had these areas identified according to the impact made by an organisation, the new methodology adds a further level of analysis assessing the financial impact ESG areas have on the organisation in terms of risks and opportunities.

Today a lot of attention is being paid to protecting wildlife and improving the environment. Natural resource tax (NRT) is one of the instruments that helps protect the environment. The Cabinet of Ministers has approved and passed to Parliament for review a set of proposals for amending the NRT Act aimed at promoting economical and efficient use of natural resources and limiting environmental pollution. According to available information, some of the amendments are to come into force on 1 January and the rest on 1 July 2024. We informed our MindLink.lv subscribers about some of the proposals on 5 May 2023. This article explores how the NRT Act is to change.

To embed sustainability aspects in its core business, an organisation should be aware of effects it has on the environment and on its stakeholders, as well as how the environment and stakeholders affect its business. Embedding sustainability aspects in business is a process that encourages the organisation to revise its business model and overall strategy, as well as gathering and analysing data for use in decision-making to identify and mitigate risks affecting it. This article offers a brief overview of the sustainability or ESG framework, focusing on “G” for governance. We are zooming in on tax governance as a sustainability aspect that we encourage organisations to embed in their core business.

The Ministry of Finance has suggested how tax legislation should be amended from 2024. This article explores proposals for amending the Corporate Income Tax (CIT) Act and the VAT Act relating to luxury executive vehicles (LEVs).

The Competition Council has started monitoring retail markets in the wake of the recent high-inflation episode. Analysing this information provides insights into the relationship between retailers and suppliers and how this affects the market. The Competition Council is soon expected to publish the data and findings derived from this monitoring, with more attention being paid to breaches of fair trade practices and prohibitions that buyers and retailers have to observe. While it’s difficult to predict what this monitoring will yield, political pressure may lead to significant changes in this sector.

In our article of 11 July 2023 “Commerce Act amended” we informed our MindLink subscribers about the extensive amendments of 16 June 2022 to the Commerce Act that came into force on 1 July 2023. In that article we looked at some of the amended clauses of the Commerce Act. This article explores the Act’s rules for paying up a company’s share capital and relevant changes that came into force in the summer.

It’s been quite a while since Latvia adopted new transfer pricing (TP) rules, yet the State Revenue Service (SRS) did not issue guidelines on charging fines for breaches of requirements for duly submitting or preparing TP files until late September 2023 (approved by SRS order No. 201 of 11 September 2023). This article explores the new guidelines.

Since 2020, companies have been under pressure to adapt to the ever-changing business landscape, which keeps serving up a variety of disruptions. It’s become clear that the ability to effectively respond to the changing conditions is crucial for any company.

In September 2023, the EU VAT Committee published guidelines on how to assess the VAT treatment of fuel card transactions, which had been dealt with earlier by the Court of Justice of the European Union (CJEU) in its ruling C-235/18 Vega International. The CJEU ruled that the Austrian company’s transaction of issuing fuel cards to other companies for fuel purchases, which was invoiced as a supply of fuel, qualifies as a service of granting credit that is exempt from VAT.

There is much talk of various sustainability aspects within and outside the European Green Deal. Sustainability has become a daily routine in the more conscientious companies, as they devise sustainability strategies and report on sustainability goals they have achieved. There are also some companies that seek to exploit this situation by advertising themselves as well as their products and services as green, environmentally friendly or sustainable, because this may give them advantages on the market. This approach is not always seen as honest, and it can mislead consumers or even affect competition.

It’s usual for sellers (and service providers) to make offers such as “buy a product, get another one for free” or “each buyer gets a gift”. For VAT purposes, sellers are not usually concerned about the concept of a gift as long as it’s up to EUR 15, but they do become more careful if gifts exceed this threshold. The restriction on low-value gifts in the Latvian VAT Act is per individual and per year, placing a certain burden on the taxable person to identify the recipient and keep such a record. However, the Act’s definition of a low-value gift contains a disclaimer that this does not apply to goods or services made available free of charge if their costs qualify as advertising or “representation” expenses. The State Revenue Service does not tend to evaluate the seller’s advertising slogans literally but will assess a supply according to its economic substance. This article explores the latest ruling from the Court of Justice of the European Union (CJEU) on how to assess gifts for VAT purposes.