Flash News offers the latest information on current tax, accounting, legal and other business issues.
Russia’s military aggression has significantly affected some of the businesses importing metal products from Russia and Belarus, as well as industries such as metalworking, defence, construction, mechanical engineering, and information & communication technologies. To promote market stability, the Ministry of Economics intends to implement aid measures as an immediate solution in the form of financial instruments to ensure traders’ future business.
Although the single tax account has been up and running since 1 January 2021, taxpayers keep wondering about how payments are recognised in the systems run by the State Revenue Service (SRS) and how taxpayer liabilities are covered. There are issues in how payments are applied to cover mandatory national social insurance (NSI) contributions and other tax liabilities. Since NSI is a cornerstone of the social security system, the National Social Insurance Agency (NSIA) and the SRS have started addressing those NSI issues. This article explores what problems the two bodies are facing and how they plan to solve them.
On 2 August the Ministry of Finance published a proposal for amending the Personal Income Tax (PIT) Act to change the rate applicable to foreign nationals working remotely in Latvia. If approved, the proposal will come into force on 1 January 2023. There is no knowing how the proposal will move on, as it still needs approval from the Ministry of Justice, but we can examine its potential impact.
On 19 July 2022 the Regional Administrative Court ruled on a case in which a taxpayer sought compensation for a loss and non-pecuniary damages resulting from an unlawful audit decision issued by the State Revenue Service (SRS) and overturned by the court. This article explores what losses (expenses) the court considers reimbursable and what the court evaluates in determining whether particular expense items can be reimbursed.
Launched by the State Revenue Service (SRS) in 2018, the taxpayer rating system started out with five dimensions of analysis to determine a taxpayer’s individual assessment in the tax authority’s eyes. After hearing suggestions from the business community in February 2020, the rating system (dubbed “tax speedometer”) was expanded to include another two analysis dimensions with five new business assessment indicators. This article explores the system’s objectives, taxpayer groups, key analysis dimensions and assessments, as well as the taxpayer’s benefits from being rated.
Our Flash News edition of 12 July 2022 informed MindLink subscribers about a new aid programme based on rules recently adopted by the Cabinet of Ministers. In that article we looked at eligible entities, qualifying activities and excluded industries. This article explores the aid instrument and the programme’s status.
The first article of our NFT series presented an overview of NFTs and analysed the Spanish tax authority’s finding that NFT is a service supplied electronically between its creator and the customer. This article explores how to determine what national VAT should be charged on NFT supplies and where the place of supply of electronic services is.
The Supreme Court’s Administrative Division has reversed the Regional Administrative Court’s ruling, which had overturned a decision from the State Revenue Service (SRS) on an additional personal income tax (PIT) liability. This article explores the case in detail.
The Latvian Labour Code is amended on a regular basis and sometimes even more than once a year, but recent years have not seen so sweeping amendments as those coming into force on 1 August 2022. This article will help you navigate the new provisions of labour law.
Nowadays renting out real estate (RE) is a common line of business carried on by individuals. The growing popularity of www.booking.com and www.airbnb.com makes choosing the right tax scheme an important decision. Latvian law offers a number of ways to register a business and pay taxes. This article explores what options are available when it comes to registering a person’s RE letting and whether it is possible to change the form of registration.
Non-fungible tokens (NFTs) have really taken off in recent years. While it might seem this technology has emerged very recently, Kevin MacCoy and Anil Dash created the first known NFT, Quantum, back in 2014. More interest in NFTs didn’t arise until six years later, when the NFT market value reached US$250 million. The market interest in NFTs grew in 2021, when US$41.3 billion was invested in the NFT market over a span of six months. Yet despite such an impressive growth in popularity, we often hear questions like what is NFT, where is it used, and how would it be taxed? This series of articles explores the idea of NFT and the VAT treatment of NFT transactions in the EU.
When external conditions are especially challenging, smooth internal processes and readily available information may prove to be a key aspect of improving your competitive edge. Today’s finance function is challenged by changes in the business environment and economy and by disruptive technology, so a CFO equipped with financial knowledge alone is no longer enough. In its annual CFO survey, PwC finds out what problems are facing companies in areas that CFOs keep on their radar as a top priority in order to grow their company and improve the performance of its finance function. This article summarises findings of the CFO survey conducted by PwC CEE and opportunities we see for supporting CFOs.
On 1 December 2021 the European Parliament published the approved directive on the preparation of a public country-by-country report (“PCbCR Directive”). It states that any multinational group with consolidated revenue exceeding EUR 750 million for each of the last two financial years has to publish certain information (including revenue, headcount, and taxes paid) on their operations in each EU member state and certain third countries. This information has to be posted on the group’s website by December 2026 relating to subjects governed by the Directive if the financial year ends on 31 December 2025.
Amendments to section 9 of the Corporate Income Tax Act came into force on 21 April 2022. The Act’s transition rules now have paragraphs 47 and 48, and there is a different CIT treatment of debts appearing on the balance sheet at 31 December 2017 and ones incurred after this date for which provisions were made before 2022 and later. This article offers an updated summary of the CIT treatment of bad debts in different situations.
The Cabinet of Ministers Rule governing a new aid programme for improving energy efficiency in manufacturers and exporters came into force on 18 June 2022. Businesses can apply for aid to cover their overheads, i.e. for a loan (or a parallel loan) of up to EUR 5 million from the Altum Development Finance Institution. Up to 30% of the loan principal can be cancelled as a capital allowance. The aid can be used on costs associated with improving energy efficiency or introducing renewable energy resources for personal consumption by businesses in non-residential buildings and warehouses. This article explores some aspects of the new aid programme described in the publicly available wording of the Cabinet Rule.
Effective from 4 February 2022, the Whistle Blowing Act introduces new requirements compared to the earlier enactment with the same title, and takes over the provisions of Directive EU 2019/1937. This article explores what a whistle-blowing system (WBS) really means in the light of the new Act and what options companies have for setting up such a system efficiently.
With environmentally friendly practices, such as waste sorting and recycling, becoming the order of the day, the natural resource tax (NRT) treatment is a hot topic too. As you know, packaging is one of the items subject to NRT. The obligation to pay tax or the right to take an exemption lies with the person who is the first to sell goods in packaging in Latvia, including foreign companies supplying their goods to Latvian companies. There are plans to amend the NRT Act on how foreign persons may take an exemption.
In March 2022, PwC conducted the “Global Workforce Hopes and Fears” survey of 52,195 individuals who are in work or active in the labour market. That was one of the largest ever surveys of the global workforce, covering a range of industries, demographic characteristics and working patterns in 44 countries and territories.
Some time ago the Latvian personal identification number was available mainly to persons holding a residence permit or an EU national’s registration certificate. Yet we are aware of cases where a foreigner without any special status had legal ties with Latvia but it was still difficult to prove their identity in person or electronically. This article explores the new tool for electronic identification: a foreigner’s eID.
Many workers take a vacation in the summer but accountants usually pick a time with a relatively lower workload. Taking a full vacation tends to be difficult when you are supposed to be filing tax reports, calculating and paying out wages, or closing the month. This article explores replacement possibilities and an appropriate evaluation of accounting risks during accountants’ absence.
With employee stock options becoming increasingly popular, Latvian companies too are offering this incentive not only to their own employees but to those of their subsidiaries. This article explores the corporate income tax (CIT), personal income tax (PIT) and national social insurance (NSI) implications of a Latvian company awarding stock options to its own and subsidiary employees.
We have written before about a taxpayer’s duty to file with the State Revenue Service (SRS) a multinational enterprise group’s country-by-country (CbC) report under section 15(9) of the Taxes and Duties Act or a statement of the reporting company and its tax residence. This article explores how to correctly disclose information in the statement in the case of a non-standard fiscal period.
The Covid-19 pandemic had a significant impact on people’s habits, with restrictions affecting many events, including contests. More and more public events are taking place as we return to normal life. Various contests are being held, and individuals taking part win prizes. What taxes apply on such cash and non-cash prizes? Who is responsible for reporting this income and paying taxes? Is it the individual or the company that holds the contest and pays the benefit?
As Russia continues the war in Ukraine, the US and the European Union (EU) together with other countries keep increasing the size of sanctions imposed on Russia.
At the EU summit held on 30–31 May 2022, the European Council agreed on the sixth package of sanctions against Russia that will mainly apply to crude oil and petroleum products supplied to EU member states. Yet the Council of Europe has agreed a temporary exception for crude oil supplied through pipelines. Ursula von der Leyen, President of the European Commission, has said that the restrictions included in the package will in fact stop around 90% of EU oil imports from Russia by the end of this year.
As the size of the sanctions grows, confused companies are having more and more questions about how to cope with the increasing sanctions burden, whether a company is supervised by particular regulatory bodies, and whether the current sanctions rules and guidelines provide for setting up an internal control system to manage sanctions risk.
Productivity has always been high on the agenda in organisations. Remote and hybrid working during the pandemic has brought some new advantages as well as complex challenges. When trying to put our processes back on track, we often focus on the process itself and how to streamline it, yet people play a big role in the productivity puzzle.
With Covid-19 restrictions being lifted in Latvia and across Europe, companies are returning to their normal working arrangements, including staff education and team building events. Event organisers, too, are resuming their business activities. The VAT treatment is clear as long as the customer is a Latvian company and the event is held in Latvia. But what happens if the event is held or the customer established in another EU member state? This article explores key aspects of event organisation services.
Employers commonly use GPS geolocation devices to monitor their vehicles or equipment and to analyse fuel consumption, mileage, driving time, idle time, parking time, usage statistics etc. European case law has introduced tighter rules and requirements for personal data processing associated with GPS tracking. There are certain restrictions that companies using these devices for business purposes should be aware of.
