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?
 

Our Flash News editions of 14 May 2019  and 21 May 2019 looked at the significance of working capital in a company’s business. This article explores when and why we need to assess working capital in a transfer pricing analysis.

A new social security agreement came into force in March 2021—the agreement on social security between the Government of the Republic of Latvia and the States of Guernsey affecting pensions. This article explores why the agreement was concluded, what problems it solves, and how it affects Latvian nationals living in Guernsey.
 

During its lifetime a company often has to adapt to new circumstances arising from its internal changes or external changes such as legislative amendments. The first thing that comes to mind when hearing the word “reorganisation” is change, something different, something being transformed, rebuilt, or improved. And that makes sense because a reorganisation means substantial changes in the company that are commonly undertaken to simplify or change the group structure, to expand its business, or, conversely, to split off lines of business.

To compute the price of a controlled support service transaction, we state the total cost incurred in providing the service then add a markup. But some costs are merely recharged without a markup. This article offers an overview of how service fees are set, focusing on so-called flow-through costs that have no element of profit.

The increasing role associations play in society and certain industries raises questions about data the associations use in their activities and communications, which is often obtained from their members. We should not forget that any association is governed by the Competition Act and that associations and their members, just like any market participant, are subject to its requirements, including restrictions on how commercially sensitive information may be transferred, gathered, and made available to association members. What rules do the members have to follow when it comes to disclosing financial data to their association?

On 12 October 2021 the Cabinet of Ministers debated and endorsed “Adopting a System of Electronic Flow of Supporting Documents and Waybills,” an informational report prepared by the Ministry of Finance (MOF) that mandates the use of electronic supporting documents and e-invoices by 2025. E-invoicing will be mandatory between businesses (B2B) and between businesses and government agencies (B2G).

This article explores the corporate income tax (CIT) and personal income tax (PIT) treatment of financial transactions between a Latvian company and its owner (an individual) in two examples:

1. The owner lends to the Latvian company. Our analysis refers to a tax ruling the State Revenue Service (SRS) published on 26 September 2021.
2. The owner borrows from the Latvian company.
    

Companies have access to several reliefs that help reduce their corporate income tax (CIT) charge on dividends. This article answers the question of whether the legislation prescribes any order in which those reliefs may be taken or whether the taxpayer has a right to determine that order.

The autumn sees the State Revenue Service (SRS) sending requests to taxpayers for information on transactions making up their bank account turnover and discrepancies with the information available to the SRS. This article explores the process and practical communication with the SRS (more details in “Bank account turnover out of line with tax filings”).
 

Employment offences commonly lead to an administrative penalty, yet employers with no practical experience of the National Labour Office’s administrative offence proceedings do not always have a clear picture of how a penalty is determined and what principles apply. This article explores the main stages of a penalty and ways to challenge it.
 

High quality comparables are crucial when it comes to setting an arm’s length price in a transfer pricing (TP) analysis. A key factor in this process is making an informed choice about the dataset size, i.e. using comparable financials for one year or multiple years. This article explores key risks and factors to consider in setting an arm’s length price of transactions and using comparables for one or more years. We will be referring to the general rules of Latvian law and the TP guidelines issued by the OECD, with an example from case law.
 

On 9 September 2021 the Court of Justice of the European Union (CJEU) ruled on a dispute over the tax authority’s right to refuse a VAT refund if the taxable person fails to duly submit documents the authority has requested to prove the person’s refund claim is valid. This article explores CJEU findings and Latvian case law.
 

We have already written about the new Accounting Act, which was passed on 10 June 2021 and comes into force on 1 January 2022. The old Accounting Act and the Cabinet of Ministers’ Rule No. 585 of 21 October 2003, Bookkeeping and Accounting (“Rule 585”) will cease to apply as a result. New accounting rules will be issued to accompany the new Accounting Act. This article explores the content of the proposed rules and the time frame for adoption.