The VAT treatment in the financial and insurance (“F&I”) sector prescribed by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, which exempts F&I services without recovery of input tax on goods and services acquired for supplying those services, remains unchanged since 1977. Irrecoverable input tax causes extra cost to F&I players and their customers as well. Our experience suggests that the VAT treatment in the financial sector has been suffering from legal uncertainty and high administrative costs incurred in applying the VAT rules. The outdated definitions of services make it difficult for fintech companies to figure out how to claim an exemption. And there are no instruments to reduce the burden of irrecoverable input tax. This article explores whether the F&I sector is in for change.

The Cabinet of Ministers is to debate proposals for amending the VAT Act that provide for transposing three Council directives that prescribe the VAT treatment of e-commerce by expanding the scope of special VAT schemes and introducing a new scheme for goods imported from third countries or territories. We have written earlier about the expected EU changes to the VAT treatment of e-commerce from 2021.

A survey PwC conducted in late 2019 finds that 77% of Latvian company representatives have asked the State Revenue Service (“SRS”) for assistance or comment, and about a half of their enquiries were concerned with interpreting tax laws.

The government is working hard to put support measures in place for entities affected by the COVID-19 crisis. Last week the Cabinet of Ministers put into effect a number of rules concerning industries affected by the COVID-19 crisis and how employers in those industries qualify for idle-time benefit. Despite the original intention to restrict tax deadline extensions and idle-time benefit to entities operating in the listed industries, at the meeting of 26 March, the Cabinet of Ministers approved a set of criteria to make an affected entity in any industry eligible for idle-time benefit and tax holidays for up to three years. This article explores what we see as key points.

Many countries have seen a rapid drop in economic activity due to COVID-19 and are trying to adopt some extraordinary tax policy measures in order to limit the damage and protect business. A fast response is crucial when it comes to mitigating the impact of the crisis. This article explores some of the tax policy measures recently adopted in Europe and Latvia.

To deal with the consequences of COVID-19, the Latvian government has decided to add tax solutions to its package of social and business measures.

Paying Taxes 2020,  an annual study of global tax administration produced by PwC and the World Bank Group, finds that economies around the world have made it substantially easier for their businesses to pay taxes thanks to technology. The report highlights the significant advantages that tax authorities give their taxpayers if they embrace technological advances. In Brazil and Vietnam, for example, the time it takes to comply with tax obligations fell by 23%, while some other countries reported a big drop in the number of tax payments.