The Corporate Income Tax (CIT) Act has been amended only slightly during 2021, as we wrote in our Flash News edition of 20 April 2021. This article explores the latest changes to the CIT Act as well as amendments being proposed for the near future, including the long-awaited rules for bad debt provisions under IFRS 9 Financial Instruments.
Drafted by the Budgetary and Fiscal Committee, endorsed by the Cabinet of Ministers and passed by Parliament, amendments to the VAT Act are waiting to be announced by the President of Latvia. The amendments are mainly related to changes in other pieces of legislation or meant to take over several VAT directives amending Directive 2006/112/EC on the common system of value added tax. This article explores what we see as key amendments.
Since the adoption of a minimum rate for mandatory national social insurance (NSI) contributions, certain industries have seen an increase in the number of functions being outsourced. Companies are also consolidating their jobs to replace any part-time workers that were not socially insured for at least the minimum monthly wage. This article looks at extra work in detail.
Latvia saw a productive autumn in terms of changes to corporate governance rules. On 11 November 2021, Parliament passed amendments to the Public Person’s Shares and Companies Governance Act, effective from 8 December 2021, requiring large central and local government companies to apply corporate governance principles and prepare various statements in this area.
The European Green Deal and net zero carbon emissions are hot topics in Europe and globally, with implications for Latvia’s environmental protection policy, particularly affecting companies that produce or import iron and steel, cement, fertilisers, aluminium, and electricity.
To mitigate the economic impact of Covid-19, the government is supporting the private sector with various measures that financially help businesses cover some of their short-term losses. Yet it is very important for the businesses to see opportunities for future growth, which often comes down to the availability of financing for development, improvements and conquering new markets.
When goods are supplied to a person in another member state, one might wonder how VAT should be properly applied if the customer has not presented his VAT registration number, yet he is known to be a trader. Is this an intra-Community distance sale or an intra-Community supply of goods? Since the VAT treatment varies, it is important to understand the features of each transaction.
The surge of online trading has more and more businesses not only selling their own goods but promoting sales of third-party goods through various electronic interfaces (e.g. marketplaces, platforms or portals). Under amendments to the VAT rules effective from 1 July 2021, in certain cases interfaces promoting third-party supplies are responsible for collecting VAT instead of the seller. This article explores cases in which the taxable person (interface) is considered to have acquired the goods and sold them on, becoming a deemed supplier.
A share premium represents an amount that is paid in addition to the nominal value of a share but is not credited to share capital. The face value rarely represents the true value, so a share premium helps the company set a fair payment for its shares and reflect their true value in various share dealings.
We have already commented on the corporate income tax (CIT) treatment of flow-through dividends and looked at personal income tax (PIT) relief available to an individual receiving a dividend. This article explores potential pitfalls in the tax treatment of flow-through dividends if a change of shareholder takes place shortly before the company decides to distribute a profit.
The global tax scene has undergone some historic changes and keeps changing. This has caused multinational enterprise (MNE) groups to revise their global business models and take steps to stay competitive. Facing the evolution of technology, environmental changes and the impact of the pandemic, MNEs are beginning to revise and transform their value chains to make their business even more efficient and profitable.
Paper documents such as invoices and waybills tend to be mislaid or submitted to the accounts department late, leading to inaccuracies in accounting records and tax returns, as well as late payments. Mandatory electronic documents could eliminate these faults.
As opportunities for digitalisation evolve, more and more companies are interested in supplying and acquiring services remotely over the internet. For example, ads are placed in news portals and e-mails. All that virtual data has to be stored somewhere, new apps are being created for customer authorisations and payments, and various other services are supplied with the help of information technology. Which of those services qualify as supplied electronically? What difficulties tend to arise in applying VAT on such services?