The package of budget bills for 2022 includes a bill of proposals for amending the Personal Income Tax (PIT) Act. This article takes a brief look at what we see as key changes.
 

We have already commented on the corporate income tax (CIT) treatment of flow-through dividends and looked at personal income tax (PIT) relief available to an individual receiving a dividend. This article explores potential pitfalls in the tax treatment of flow-through dividends if a change of shareholder takes place shortly before the company decides to distribute a profit.

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.