Increasingly more companies have distributed their profits accrued before 2018 without paying corporate income tax (“CIT”) on the dividends under the new CIT regime. When it comes to distributing “new” profits, the shareholders may wonder about ways of cutting the tax charge on dividends. This article explores some of the possibilities, suggestions, and the latest developments.
Section 15.2 of the Taxes and Duties Act requires a taxpayer to meet requirements for the timeliness of information included in their transfer pricing (“TP”) documentation and for regular updates to reflect the present situation. During a period of calm in preparing and filing TP documentation, we asked the State Revenue Service (“SRS”) to answer some confusing questions about updating comparable data and revising financial data, including the scope for taking the roll forward approach.
The summer is rolling on and has all companies thinking about vacations and staff replacements. Accounting is one of the departments expected to promptly handle various enquiries and confirmations to ensure business continuity. Everyone who works in the accounting field is aware of situations where an accountant cannot take a vacation during the monthly closing, when filing reports, and during the payroll calculation. When is the accountant supposed to go on vacation? This article explores possible solutions.
When doing a transfer pricing analysis of financial transactions, we need to assess the borrower’s creditworthiness before setting an interest rate. To evaluate the risk associated with an intragroup financial transaction and determine an arm’s length interest rate for taking credit risk, the lender should evaluate the likelihood of the borrower defaulting, i.e. creditworthiness, and the probability of recovering the loan. This article explores a credit rating model that multinational enterprises often create to determine the creditworthiness of particular units.
On 27 May 2021 a meeting of state secretaries heard the announcement of draft rules to be issued by the Cabinet of Ministers, which provide for adopting the minimum and maximum income that is subject to voluntary national social insurance (“NSI”) contributions and to mandatory contributions for self-employed persons. This article explores the new draft rules, which are to replace Cabinet Rule No. 1478 of 17 December 2013.
Effective from 1 January 2018 the Latvian tax system has undergone important changes affecting the taxation of personal income, including dividends. This article examines some of the changes in the tax treatment of dividends from Latvian sources and their impact on Latvian, Estonian and Lithuanian taxpayers.
Idleness benefit and aid for wage subsidy are paid to workers for the period from 9 November 2020 to 30 June 2021. This article summarises key aspects a payroll accountant needs to consider when calculating average earnings for a worker that has received payments as part of state aid for companies affected by the Covid-19 crisis. The annual income tax filing season usually causes workers to scrutinise their income and it becomes important to correctly calculate income for past periods.
Restrictions imposed to tackle the Covid-19 crisis have adversely affected many companies’ ability to carry on the sort of business they were able to do before the emergency situation was announced. It is not only their ability to make a profit that is restricted but also their ability to cover business costs. State aid for shopping malls and sports centres is awaiting approval from the European Commission this week. Both types of aid are to be granted and monitored by the Latvian Investment and Development Agency (LIAA). An aid application is due by 31 May 2021 (unless the deadline is extended) so it has to be ready in a week’s time with a number of documents attached. LIAA will decide to grant aid by 30 September 2021 and check 15% of aid recipients on a random basis. This article explores key aspects of this aid.
The Covid-19 pandemic has changed everyone’s life. With live entertainment still restricted, companies are holding online events that offer a prize to the winner of a competition. This article explores the tax treatment of prizes using a practical example.
In the modern age of large corporations, the business value chain, which usually comprises a range of functions such as devising and implementing a business strategy, research and development, production, marketing, sales and logistics, spans a number of group companies operating in different countries. This apportionment is based on business needs and national rules for permanent establishments. Since an enterprise group involves multiple companies, they conduct intragroup transactions and charge transfer prices, giving rise to tax risks.
With the Covid-19 pandemic leading to many redundancies, the courts are increasingly hearing disputes over mistakes employers make in laying off their workers. This suggests a lack of understanding of how a workforce reduction should be achieved lawfully. It is important in this context for the employer to offer the worker another job before issuing a redundancy notice.
On 21 April 2021 the European Commission published its proposal for a regulation on artificial intelligence (“AI”), the first piece of legislation in Europe to govern AI matters. This article explores key provisions of the proposed regulation.
Our customers have been wondering about differences in the corporate income tax (“CIT”) treatment of receivables on the balance sheet at 31 December 2017 and those arising at a later date. This article summarises the CIT treatment of receivables in various situations.
The reporting obligation under DAC6 has been in force since January 2021 and some member states issued guidance on the application of DAC6 provisions as they were preparing to pass the directive in their national law a long time ago. The Latvian State Revenue Service (“SRS”) has now published answers to questions frequently asked by Latvian tax consultants, credit institutions and other intermediaries about evaluating the reporting obligation, as well as other technical matters around DAC6 reporting. This article explores key clarifications and interpretations in the SRS guidance.
In April 2021 the Organisation for Economic Co-operation and Development (“OECD”) published the Third Peer Review Report on Treaty Shopping, which reflects progress in implementing the BEPS Action 6 minimum standard. This standard on preventing the grant of treaty benefits in inappropriate circumstances is one of the four BEPS minimum standards that all members of the OECD/G20 Inclusive Framework have committed to implement (over 125 jurisdictions collaborating on the implementation of the BEPS package). This article explores the main findings of the OECD peer review.