Our experience suggests that the State Revenue Service (SRS) has recently focused on checking how Latvian corporate taxpayers fulfil their obligation under transfer pricing (TP) legislation, i.e. (1) whether they have prepared TP documentation in the prescribed form by the statutory deadline and (2) whether their documentation gives all the required information to verify that their controlled transactions are arm’s length.
Every now and then corporate groups decide to undertake a strategic restructuring of their assets, including a transfer of assets to one or more group companies for financing another activity. Using a contribution in kind to increase a company’s share capital raises a number of important legal and tax issues. In this article we will explore whether a contribution in kind attracts VAT, as well as assessing the need to adjust the input VAT deducted on the contribution and the right to deduct the input VAT on services acquired for the contribution, such as expert valuation services and legal advice.
Effective from 24 September 2022, urgent amendments to the Immigration Act significantly limit the scope for Russian and Belarusian nationals to obtain a Latvian temporary residence permit (TRP), including on employment or business grounds. What awaits nationals of these countries holding a TRP and working for or running a Latvian company? In this article we will sort out the amendments affecting the labour market and explain whether those persons have reason to worry and what happens if a TRP is about to expire.
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.
When it comes to performing accounting or any other duties where data processing takes a long time or where you regularly need to perform some repetitive or similar activities and processes, it’s great to keep easy-to-use tools handy. As we are putting together courses at PwC’s Digital Academy, we would like to tell you about a tool that will make your daily tasks much easier to do. Power Query is a data preparation and transformation tool available in Microsoft Power BI and, starting from the 2016 version, in Microsoft Excel and other programs. This tool allows users to obtain data from a variety of external data sources and from files stored on computer. It allows you to group and transform data and perform other activities. This article offers a few practical examples to raise awareness of how this functionality can be used and what benefits it offers.
Section 18.2(1) of the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act requires a company to notify the Enterprise Registry of its ultimate beneficial owner (UBO) and how UBO control is exercised.
Amendments to the Proof of Identity Act that came into force on 1 September 2022 will also affect entities that are subject to the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act (“AML/CTPFA subjects”). If you want to keep your client relationships then you should evaluate how the amendments will affect them, and you should adopt solutions that will allow you to legally continue those relationships.
Latvian taxable persons may recover VAT paid on goods and services acquired in other EU member states. This is done under Council Directive 2008/9/EC, i.e. VAT is refunded to taxable persons that are not doing business in the member state of refund but are doing business in another member state. Latvian taxable persons may apply for a VAT refund from other member states for 2021 by 30 September 2022.
Investment funds have recently become more active in Latvia. Foreign non-resident investment funds often invest in the share capital of Latvian companies. The Corporate Income Tax (CIT) Act is silent on the CIT or personal income tax treatment of a non-resident investment fund paying income to its non-resident members from the sale of shares in a Latvian-registered company. Following the “Advise First!” principle of the State Revenue Service (SRS), PwC has prepared an application on behalf of a client seeking an advance tax ruling on how to proceed in this case.
With advanced technology and improved international cooperation, people are becoming less and less tied down to a particular residence. Many relocate from Latvia to live abroad indefinitely. Since this is a new experience for most people, this article summarises key tax aspects a Latvian tax resident should consider in the case of relocation.
With the financial year nearing its end, section 15.2 of the Taxes and Duties Act requires many companies to prepare, or to prepare and file with the State Revenue Service (SRS), their transfer pricing (TP) documentation. Since determining related-party status often confuses taxpayers and authorities, this article reminds you who is considered a related party for TP purposes and what transactions require the taxpayer to prepare TP documentation.
As company balance sheets become increasingly saturated with liabilities and future cash flows less certain, the scope for obtaining bank finance on balanced terms is limited. Yet companies need fresh capital to continue investing and to make their business more resilient to energy shocks and lack of raw materials, and to cope with rising costs, which often cannot be offset by an increased price of the end product.
Ever-changing legislation puts additional pressure on businesses and individuals. To make sure you haven’t missed any important changes and to spot potential risks early, the best solution is to keep up with the changes and know your way around the relevant resources.
In statutory cases, the taxpayer is liable to prepare transfer pricing (TP) documentation and file it with the State Revenue Service (SRS). An examination of TP documentation helps the SRS monitor the correctness of corporate income tax (CIT) payments because the difference between a controlled transaction’s value and market price must be included in the taxable base under the CIT Act. If the taxpayer defaults on the obligation to prepare and file TP documentation, then in addition to the opportunity to start an audit and assess the correctness of the CIT calculation, the SRS may start a data assesment in the field of tax revenue risks and charge a hefty fine on the company if an offence is found. This article explores what offences relating to TP documentation permit the taxpayer to be fined outside an audit and how the SRS should evaluate and justify the size of fine.