The European Central Bank (ECB) has been increasing its key interest rates since June 2022 to mitigate the high inflation caused by Covid-19. Taxpayers have good reason to debate whether they should revise the interest rates historically applied in their long-term financing transactions between related parties and apply new rates that are arm’s length and reflect the current economic conditions. This article explores the vision of the State Revenue Service (SRS) and recommendations for mitigating potential transfer pricing (TP) risks.
Setting an arm’s length fee for your intragroup services is one of the transfer pricing (TP) challenges you might face. In 2018 Latvia decided to offer relief for low value-adding services (LVAS) to facilitate this process for companies. If certain criteria are met, LVAS can be analysed under a simplified procedure, meaning the service provider can apply a 5% markup on costs without undertaking a detailed benchmarking study. This article serves to remind you of a key requirement when it comes to taking the simplified approach to LVAS.
We have written before about the profit split method (PSM) and its potential in transfer pricing (TP) analysis, looking at the essence of this method and the scope for using it. This article explores PSM’s advantages and disadvantages.
We have analysed the CIT treatment of doing business with companies on the blacklist of uncooperative tax havens earlier. This article explores new changes to the list and how they affect transfer pricing (TP).
It’s been quite a while since Latvia adopted new transfer pricing (TP) rules, yet the State Revenue Service (SRS) did not issue guidelines on charging fines for breaches of requirements for duly submitting or preparing TP files until late September 2023 (approved by SRS order No. 201 of 11 September 2023). This article explores the new guidelines.
On 12 September 2023 the European Commission published its proposal for a transfer pricing (TP) directive to align TP requirements across the EU. While most of the member states, including Latvia, are to some extent applying recommendations made by the OECD TP guidelines, the European Commission is proposing the directive and calling on the member states to adopt the same TP standards in order to secure a level playing field. If the new rules are approved in their current version, they will be passed into the member states’ national law by 31 December 2025 and applicable from 1 January 2026.
We have written before about the directive on the multinational enterprise (MNE) group’s public country-by-country report (CbCR) and how this is being passed into the national laws of EU member states. In this article we will look at Latvia’s progress in passing the directive and find out what aspects Latvian taxpayers need to consider and what issues and challenges they may face.
A directive requiring multinational enterprise (MNE) groups to prepare public country-by-country reports (“CbCR”) was published in the EU Official Journal in December 2021. The member states had until 22 June 2023 to pass the directive into their national laws. In this series of articles we will look at the progress made by Latvia and other member states and will explore the directive’s history, goals, potential benefits and taxpayer challenges.
Transfer pricing (TP) experts of the State Revenue Service (SRS) have agreed to meet up with Latvian TP consultants on several occasions in late September to debate some pressing TP concerns and to set out the SRS opinion on how to solve current and future TP problems. In this article we will outline SRS comments on TP validation and look at some of the topics and questions put up for debate with the SRS.
Latvia’s current transfer pricing (TP) rules came into force back in 2018, bringing changes to the structure of TP documentation (TPD) and to materiality thresholds that require taxpayers to prepare a specified form of TPD. Many taxpayers are still confused about the right way to measure the amount of a controlled financial transaction, which results in an obligation to prepare, or to prepare and file, a specified form of TPD if the taxpayer has no other types of controlled transactions. This article explores the procedure for determining the controlled transaction amount (CTA) for various types of financial transactions according to Latvian TP rules and international law, as well as looking at the practice in Lithuania and Estonia, the most similar economies to Latvia.
Companies in multinational enterprise (MNE) groups increasingly tend to enter into cost contribution arrangements (CCAs) for their joint projects.
In an earlier MindLink article we evaluated transfer pricing (TP) challenges facing distributors in multinational groups and the scope for using Berry ratios in assessing whether the value of a controlled transaction is arm’s length. In this article we look at a practical example of how Berry ratios can be used, as well as discussing requirements and conditions you need to consider when it comes to segmenting your financial data.
In our previous articles we discussed the transfer pricing (TP) aspects of guarantees and looked at methods that can be used to arrive at an arm’s length price. We will close out this series of articles with key insights from international case law and compare how the tax authorities treat the validation of guarantee transactions in a TP file.
Our experience suggests that intragroup services represent the most common centralised activities in a multinational enterprise (MNE) group and they are also transactions being scrutinised by the tax authority.
Tax resident status prescribes a personal income tax (PIT) liability on your worldwide income in your tax residence country. You should carefully assess your tax resident status to avoid potential double taxation, if the tax authorities of two countries treat you as their tax resident.
“By working closely with multiple executives and shareholders of both private and State-owned corporates, we have observed an increasing interest about the capital markets. Business leaders have become more ambitious and better aware of the myriad of benefits from attracting capital via the exchange. At PwC, we are confident that First North Certified Adviser status will allow us to provide a more diversified advice for our clients in the Baltic region and help navigate them in the journey of an intensified capital market activity,” highlights Raimonds Dauksts, Head of Advisory at PwC Latvia.
First North is a growth market designed for ambitious small and medium-sized companies in the Baltics. Being a Certified Adviser permits PwC to guide growth companies in Baltics through the Firth North application process and ensure they meet all the market’s requirements on a continuous basis.
Eiropas Parlaments pagājušā gada novembrī oficiāli apstiprināja Korporatīvās ilgtspējas ziņošanas direktīvu jeb CSRD (Corporate Sustainability Reporting Directive). Šobrīd Eiropas Savienības dalībvalstu, t.sk. Latvijas, rīcībā ir 18 mēneši, lai šo direktīvu pārņemtu savos tiesību aktos. Šādi iecerēts uzlabot pieejamās nefinanšu informācijas kvalitāti, nodrošinot uzņēmumu dažādo ietekmes pušu vajadzības un veicināt kopējo Eiropas pāreju uz ilgtspējīgāku ekonomiku.
Šajā PwC Nodokļu podkāsta epizodē PwC Latvija ilgtspējas pakalpojumu vadītāja Maija Orbidāne skaidro, kādas ir šīs direktīvas prasības, kā tas ietekmēs uzņēmējus Latvijā un kādi ir laicīgi veicamie mājasdarbi šajā sakarā.