This series of articles offers information on the nature of state aid, and this time we will look at a set of state aid rules that is used very widely: de minimis aid. This aid is particularly attractive because its conditions are simplified and it is more accessible than other types of aid. This article explores key changes to these rules, where you can sign up for this aid and what conditions apply.

The live streaming of video games has become a popular form of entertainment attracting millions of global viewers on streaming platforms. The creators of video game livestreaming often encourage viewers to make voluntary payments supporting the gamer, which in certain cases may be his only source of income. This income has attracted the attention of the State Revenue Service (SRS). Having examined a person’s activities of creating video game streams and receiving money from viewers, the SRS found an unregistered economic activity and charged personal income tax (PIT). The person challenged this decision, and the case ended up in the Latvian Supreme Court. This article explores the background to the case and the Supreme Court’s opinion on the PIT treatment of income received from viewers during the live streaming of video games.

Latvian law lays down different principles for including employment periods and periods equivalent to employment in the insurance period for Latvian nationals and foreign nationals, including EU nationals receiving an old-age pension. This has caused disputes between pension recipients and the National Social Insurance Agency (NSIA), as well as building the case law based on interpretations of the Latvian Constitution, EU law and international agreements.

Today’s rapid technological advances have considerably changed the way business processes are organised. Integrating electronic invoices (e-invoices) with enterprise resource planning (ERP) systems has become a key strategy in companies looking to improve their operational efficiency and to simplify their financial processes. This integration not only accelerates invoice processing but also significantly improves data accuracy and governance capabilities, marking significant changes in financial transactions.

In a previous article, we used a tax gap example to explain why taxation is a key pillar of ESG. Tax transparency and tax governance in the context of ESG are relevant topics in the PwC network – last year PwC published a study ‘Tax transparency and sustainability reporting in 2023’. The study looks at the sustainability reports of 269 listed companies (Australia, Brazil, Germany, Ireland, South Africa, Spain, Switzerland and the UK), i.e. whether their reports address tax aspects and how. The study examined what sustainability frameworks (i.e. documents and guidelines) companies use the most often to disclose tax aspects in their sustainability reports. In this article we have summarised information from the study to explain what tax details should be included in a sustainability report.

Communicating with the State Revenue Service (SRS) is certainly the safest way to make sure the interpretation of law we use daily complies with how it was originally intended. Most of the guidelines published by the SRS explain clearly how statutory requirements should be applied. Yet the 2019 guidelines on transfer pricing (TP) documentation offer a formula for computing the amount of a controlled credit-line or cash-pool transaction made in the financial year that gives the taxpayer much more room for interpretation. This alternative formula became the subject of debate again in recent communication between TP professionals and the SRS.

Inheritance tax is payable by individuals that receive property or money from a testator. Rates and exemptions may vary from country to country according to the degree of relationship between heirs, the inherited value and other criteria. Latvia has not introduced inheritance tax. This article explores the Finance Ministry’s proposal for introducing inheritance tax in Latvia, as identified in the report ‘An assessment of the current workforce cost situation and proposals for future action’, a tax policy planning document.

In early July 2024, the European Commission (EC) published its annual report on tax policies across the EU. Value added tax (VAT) is one of the most important taxes in the EU accounting for about 7.5% of GDP and 18.6% of total EU tax revenue in 2022. This article explores the EC’s VAT findings.

A system of artificial intelligence (AI) can make your day-to-day work increasingly more efficient, competitive and productive in both the private and the public sector. There are various AI system models on the market you can put in place, tailor to your company’s needs and use in your day-to-day work. Remember that, for instance, a company using an AI system for its professional purposes under EU Regulation 2024/1689 (the ‘AI Act’) faces various obligations for AI system maintainers.

Electronic structured invoices (e-invoices) are becoming increasingly widespread globally between businesses (B2B) as well as between businesses and government agencies (B2G). E-invoices are gradually replacing old-fashioned paper invoices and PDF invoices. Recent years have seen the member states working hard to implement e-invoicing. Latvia is set to legislate on mandatory e-invoicing in the B2G segment from 2025 and in the B2B segment from 2026.

A claim for damages and litigation expenses totalling EUR 212,040.63 was fully satisfied in a civil case where a PwC Legal client was seeking damages, including lost profits, from a certain private company. The plaintiff’s interests were represented by Natalja Purina, an attorney-at-law with PwC Legal.

The first year of audit has ended since insurance and reinsurance companies and foreign insurers’ branches started preparing their accounts and consolidated accounts according to International Financial Reporting Standard No. 17, Insurance Contracts (IFRS 17) with significant amendments. The new approach to measuring income from insurance contracts has transformed taxpayers’ accounting records and affected their transfer pricing (TP) policies. As the deadline for submitting TP files for FY23 is approaching, it’s time to assess how IFRS 17 affects insurers’ transactions with related parties.

The media have been actively using the term ‘cyber warfare’. At this year’s ‘Lampa’ Conversation Festival, I took part in ‘Are we ready for cyber warfare?’, a discussion held by the Ministry of Defence. At the moment we are unable to draw a clear line between the kind of cyber warfare that calls for a military response and the sort of cyber warfare that qualifies as an attack under the Criminal Code. Yet cyber warfare is definitely going on in Latvia and companies should be monitoring their cyber security carefully.

Sustainability has become a salient feature in today’s business landscape, with companies having to adapt to the growing pressure for operating responsibly and transparently. The European Union (EU) has taken significant steps to improve corporate sustainability reporting standards by implementing the Corporate Sustainability Reporting Directive (CSRD). It lays down a wider range of reporting requirements and offers more detailed guidelines helping companies make accurate and complete disclosures on their ESG impacts, as well as outlining criteria for companies liable to report on their sustainability practices.

In this article, we will explore how the courts ruled on a tax audit where the State Revenue Service (SRS) claimed the company under audit had wrongly deducted input VAT and misapplied a ratio. Although the SRS did not approve the company’s adjustments to its VAT returns and did not refund the VAT it had overpaid, the courts found the penalty and interest charged by the SRS to be justified. This case highlights important lessons for companies to avoid similar problems in the future.

What are the most common errors in corporate income tax (CIT) treatment? And what controls can be used to avoid them? Episode 43 of PwC’s Tax Podcast features PwC tax director Irena Arbidane and senior consultant Tatjana Klimovica discussing the impact of common CIT errors on companies and exploring tax risks associated with management and consulting services.

As technologies keep evolving, we often hear about new tools of artificial intelligence, business intelligence, data processing, analysis or visualisation and the opportunities they offer. These technology solutions can help companies make fast and efficient decisions and manage their processes transparently. Transfer pricing (TP) has been evolving in this respect as well. The opportunities offered by various technology tools can help companies standardise, automate and rationalise their processes associated with TP management and compliance, an area known as operational transfer pricing (OTP). This article explores what the new concept means and what opportunities it offers.

Regulation 2024/1624 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the ‘AML Regulation’) was passed on 31 May 2024. Money laundering issues have been regulated at EU level for a long time, but this was so far done in the form of a directive laying down only minimum standards and giving the member states wide discretion to choose ways of implementing them.

This article kicks off a new series on state aid, a tool that municipalities and other public persons use to drive economic growth and support business across the country. This article explores the main principles of state aid, which every company needs to know because under the European Court of Justice’s case law every company must act as a good steward and be able to establish whether the state aid received is legitimate. Did you know that state aid is in fact forbidden and only permitted in exceptional cases?

The Constitutional Court (CC) ruled on 13 June 2024 that provisions of the Personal Income Tax (PIT) Act are consistent with section 105 of the Constitution, which guarantees the right to property. The ruling was passed after the Administrative Regional Court and Riga City Court disputed the PIT Act’s provisions requiring payment of PIT on gambling and lottery winnings regardless of what the gambler has paid to play the game.

In November 2022 the EU passed Directive 2022/2381 on improving the gender balance among directors of listed companies as a key step towards achieving a gender balance in corporate governance. This is also known as the Women on Board Directive, which may create a false impression that only women should be appointed to the board in the future. This article aims to dispel this myth and describes the directive’s goals in more detail. Latvia is to pass the directive into its national law by 28 December 2024, so we will soon be able to examine some legislative proposals (in our next article).

The large amount of information being generated every second has changed the way business decisions are made in today’s data-based world. It’s important for tax and financial professionals to understand what opportunities and solutions big data has to offer. If you are using improved data analytics processes with appropriate algorithms, big data can give you a detailed picture of financial trends, customer behaviours and operational efficiency. This article explores the foundations of big data analytics and the scope for using the available data to make strategic decisions and drive growth in your organisation.

Proposals for amending the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act (AMLCTPFA) were laid before Parliament on 3 May 2024. These are being debated along with several other enactments governing crypto-asset service providers to harmonise the national law with the EU framework. In addition to several improvements related to crypto-asset service providers, the Finance Ministry has presented proposals for improving the general AMLCTPFA rules. This would help ease the administrative burden while staying true to AMLCTPFA’s objective. However, the legislative process is not yet finished and the current wording of the proposals might not receive Parliament’s approval in the last reading. This article explores some of the most significant improvements.

In our Flash News edition of 22 November 2023 we wrote that a Latvian company doing business with unrelated parties that are based, formed or established in low-tax or tax-free jurisdictions (‘tax havens’) may be liable to prepare and submit to the State Revenue Service (SRS) a local file and a master file describing the transfer pricing (TP) methods applied in controlled transactions made by the Latvian company and by the group. With Russia added to the blacklist of tax havens on 1 July 2023, Latvian taxpayers might face difficulties in preparing their TP files because the TP analysis of their transactions is hindered by a lack of information on the unrelated party. In this article we look at the difficulties and possible solutions.

ESG or sustainability is a hot topic that people initially associated with the environment and climate change. The social and governance components of ESG have recently become even more relevant when it comes to workers, supply chains or tax management. This article briefly looks at why we should be treating taxes as a key component of sustainability.

The European Union (EU) celebrates May as the month of diversity to highlight the importance of diversity and inclusion (D&I) in society. Diversity basically reflects the nature of a person’s unique and distinct qualities and relates to people’s different values in terms of gender, age, ethnicity, religion, sexual orientation, abilities and experience.

Over the last six months I’ve been comparing the information technology (IT) inventory in a number of Latvian companies with their global industry peers. PwC makes a comparison in the course of developing a company’s IT strategy or assessing its digital transformation maturity. For comparison purposes we use similar corporate indicators gathered by the American Productivity & Quality Center, a leading global authority, and surveys of IT practices in various industries. The results show a systemic trend.

On 24 May 2024 the Finance Ministry launched a public consultation on proposals for amending the Accounting Act that require invoices to be prepared as structured electronic invoices. Latvian companies invoicing state-funded organisations will have to use structured electronic invoices from 1 January 2025. Other companies will be covered from 2026. This article explores the early proposals for implementing e-invoices in Latvia.

In today’s rapidly changing world, organisations need to be proactive to stay competitive and they also need to regularly assess potential business risks and opportunities. When it comes to assessing risks and opportunities, businesses often opt for enterprise risk management – the culture, capabilities and practices an organisation integrates with setting a strategy and applies when it carries out that strategy, with the purpose of managing risk in creating, preserving and realising value.

The International Internal Audit Standards Board has been working for several years to update and improve the current international standards for the professional practice of internal auditing to promote the profession’s evolution and internal audit quality and to provide added support for internal audit functions facing ever-changing external and internal risks. This work resulted in the updated and improved international internal audit practice standards being published on 9 January 2024 and coming into force on 9 January 2025. This year, all internal audit functions have time to assess their compliance with the new standards’ requirements and to identify any necessary improvements. We believe this is a great opportunity to make long-term changes to your internal audit function and help it provide even more significant support in achieving your organisation’s goals.