Debt assignments are widely used in business. A debt assignment allows the company to turn its trade receivables into working capital. The sale (assignment) of a debt is increasingly taken to mean the transfer of a debt arising from consumer credit to licensed debt recovery service providers in order to recover the debt out of court. In practice, debt assignment has a wide range of uses – it is also used by lenders that take the original creditor’s place, including individuals investing in lending platforms.
The VAT treatment of debt assignments is not straightforward and may vary according to the characteristics of each assignment. It is also a misconception that debt assignments do not require an evaluation of their VAT treatment. This article explores how debt assignments are treated for VAT purposes.
If a company’s debtor has been removed from the Commerce Register, can the company write off an account receivable from that debtor with no corporate income tax (CIT) consequences? This article explores things to consider when it comes to writing off a debt like this, and what documents the company must hold.
The Public Benefit Organisations (PBO) Act defines a donation but the concept of sponsoring remains undefined. In practice, companies that sponsor events organised by PBOs might wonder whether sponsoring has the same tax treatment as a donation. This article explores the tax implications of sponsoring PBOs.
Latvia has offered a temporary residence permit (TRP) in exchange for investment for many years. A number of businessmen and investors found this to be an attractive proposition, as it allowed them to successfully start or continue their business in Latvia and freely travel across Europe. As is often the case, however, the devil is in the details. The question of taxes can ruin your business plan and form a basis for cancelling your TRP.
A Latvian company in a vertically structured group often receives dividends from subsidiaries and pays them on to its owners. Such flow-through dividends qualify for a special relief under the Corporate Income Tax (CIT) Act: if certain conditions are met those dividends are taxed only once even if tax has been paid abroad. In practice various situations may arise, for instance, a dividend is received and paid in different periods, the profit may not have been taxed in the payer’s country, the Latvian company receives the dividend net, i.e. after tax has been withheld in the payer’s country. This article explores some relevant examples.
Companies often provide various intragroup services for optimisation purposes. Whether such companies are governed by the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act (the “Act”) is a question that has always come under a great deal of scrutiny. Effective from 12 July 2021, section 3 of the Act contains subsection 6, which prescribes exclusions and answers questions that group companies tend to ask when assessing whether they are governed by the Act. This article explores how intragroup services qualify for statutory exclusions.
In July 2021 the OECD released Latvia’s Stage 2 Peer Review Report findings obtained in peer-reviewing its progress with implementing the Minimum Standard of BEPS Action 14 for improving tax dispute resolution mechanisms. Stage 2 aims to monitor the implementation of recommendations arising from Latvia’s Stage 1 Peer Review Report. Overall the Stage 2 report finds that Latvia has eliminated most of the flaws found in the Stage 1 report.
The Corporate Income Tax (CIT) Act reform effective from 1 January 2018 has brought changes to all aspects of CIT treatment, including thin capitalisation rules. This article explores whether banks and insurance companies should include their excess interest expenses in their CIT base (taxable income).
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.
To begin the new training season, PwC’s Academy offers everyone interested, whether you are in Latvia or abroad, an opportunity to gain valuable knowledge of taxes and other relevant business topics online.
The year 2021 and the current macroeconomic cycle have brought a number of adjustments and uncertainty about the future to households (private consumers), businesses of various sizes, and policymakers. Covid-19 and related paradigm changes, the risk of recurrent pandemic, disrupted logistics and supply chains, and other factors create substantial risks affecting companies’ ability to stay in business and grow. This article explores common causes of financial distress and debt restructuring tools, including how companies can reach an agreement with the State Revenue Service on paying taxes.
On 21 May 2019 we informed MindLink.lv readers about Ruling C-235/18 Vega International issued by the Court of Justice of the European Union (CJEU) on VAT treatment where a company provides its subsidiaries registered for VAT in various EU member states with fuel cards for various fuel suppliers and arranges payments between those subsidiaries (the actual consumers of fuel) and the actual suppliers. Based on this CJEU ruling, the Latvian State Revenue Service (SRS) has issued guidance on the VAT and excise treatment of fuel card transactions. This article explores their opinion on applying tax rules to fuel card transactions.
We have written earlier about amendments to the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act (the “Act”), which, among other things, will make it easier for persons that are subject to the Act (“Subjects”) to report suspicious transactions and will set up a common customer due diligence tool. This article explores changes to the requirements affecting the ultimate beneficial owner (“UBO”) of a Subject.