|
Dear clients and cooperation partners,
In this Tax Newsflash, we continue providing information on changes to Latvian tax laws. This time, the focus is on amendments affecting excise tax, value added tax, the procedure on use of cash registers and electronic devices, as well as expected amendments to several tax laws in relation to introduction of a new business form – the micro enterprise.
1. EXCISE DUTY
1.1. New procedure on excise duty guarantees
A new procedure on excise duty guarantees was introduced on 3 March 2010 and on 1 April 2010 by the coming into force of amendments to Cabinet of Ministers (CM) Regulations No 638 and also by the later coming into force of new Regulations No 302 “Regulations on Excise Duty Guarantee” (cancelling CM Regulations No 638). The new regulations mainly keep the previous procedure (with amendments made on 3 March 2010) with some amendments, such as:
- Removing the requirement imposed on businesses to file monthly returns to the SRS on use of general guarantee of excise duty in a taxation period.
- Specifying the right to allowance on tax guarantee registration by exporters of excise goods, as well as persons who have been operating in the market of excise goods for an extended period and whose tax paid exceeds LVL 5 million annually.
- Removing the limitation (one year) of maximum validity for general guarantee certificates.
- Specifying activities to be performed by a business person in relation to the guarantee in case of annulment of a special permit (licence) for operations with excise goods, and obligations of the guarantor after losing the status of guarantor.
- Allowing confirmed as well as nonconfirmed traders to use excise duty guarantee for receiving excise duty markings (stamps).
- Providing exporters and depositors of state reserves of oil products and bio fuel with allowances on registration of general guarantee.
- Decreasing the minimum general guarantee for oil products and small breweries.
- Specifying calculation of duty guarantee if a guarantee depositor operates with various excise goods subject to different principles of decreasing the general guarantee for excise duty.
- Specifying a legal norm for termination of operations if the guarantee allowed for excise duty is exceeded.
- Specifying the right to allowance on registration of excise duty guarantee in Latvia for bio diesel made of rapeseed oil.
1.2. Amended Procedure for Marking Alcoholic Beverages and Tobacco Products
On 1 April 2010, amendments to CM Regulations No 320 “Procedure for Marking Alcoholic Beverages and Tobacco Products with Excise Duty Stamps” came into effect.
Under these amendments the minimum order of paper excise duty stamps for smoking tobacco, cigars, and cigarillos is decreased (by half) (7,000 instead of 14,000), and the appendices to the Regulations are expressed anew.
1.3. New return forms for excise duty prepared
On 1 April 2010, new CM Regulations No 300 “Regulations on Forms of Excise Tax Returns and Procedure for Completion” came into force replacing the previous CM Regulations No 521.
Under these regulations, new forms for excise duty returns must be completed and filed for taxation periods starting from April 2010. These have been prepared with the aim of decreasing the administrative burden and providing a uniform understanding how to complete return forms. Namely, parts of the return form correspond to types of excise duty payers and only those parts must be completed that relate to the particular excise duty payer. Furthermore, the regulations provide detailed explanations on what information must be indicated in which column and do not require indication of information that the SRS already has.
1.4. Other amendments to regulations related to excise duty
On 1 April 2010, numerous amendments to excise duty related regulations came into effect, as well as completely new regulations. Among the most important amendments are the following:
- New CM Regulations No 274 “Procedure on Specifying the Amount of Oil Products in Litres at 15 Degrees Celsius upon Calculating Duty for Oil Products”.
- New CM Regulations No 956 “Procedure for Granting the Status of an Independent Small Brewery and Applying the Excise Duty Rate to Beer Produced by Independent Small Breweries”.
- New CM Regulations No 310 “Procedure for Transferring the Excise Duty Paid for Excise Goods to Covering Tax Debts, Further Payments of Excise Duty or Other Tax Payments, or for Repaying; and Procedure for Destroying or Recycling Alcoholic Beverages or Tobacco Products”.
- Amendments to CM Regulations No 173 “Procedure on Exempting Certain Tobacco Products from Excise Duty”.
The amendments specify documents to be filed with the SRS for tobacco products used in verifying quality of tobacco products and correctness of test results if a taxpayer wishes to claim exemption from excise duty. In this regard, a separate application will no longer be needed. Instead, the tax return must contain an attached overview or test confirmation from a laboratory accredited in Latvia (or a laboratory notified by another EU Member State) indicating that the tobacco products will be used for confirmation of test results.
- Amendments to CM Regulations No 525 “Procedure on Applying a Decreased Excise Duty Rate to Certain Oil Products or Exempting Them from Excise Duty”.
These amendments or new regulations mainly keep the requirements of the previous CM regulations, and contain only editorial corrections.
 Return to top
2. VALUE ADDED TAX
Decreased rate applied to accommodation services
On 25 March 2010, the Saeima (Latvian Parliament) approved amendments to the VAT Law. Under these amendments starting from 1 May 2010 a decreased 10% VAT rate (instead of the 21% VAT rate) will be applied to accommodation services in tourist dwellings.
Return to top
3. OTHER AMENDMENTS
Amended procedure for using cash registers and electronic equipment
On 13 March 2010, amendments to CM Regulations No 282 “Procedure for Using Electronic Equipment and Appliances for Registering Taxes and Other Payments” came into effect. The amendments:
- Remove the obligatory requirement imposed on users of a cash register (cash system, specialised equipment or appliances) to print register (logbook) data of a cash register, cash system or appliance (“register”) on the last day of a month and to stitch the data chronologically together with Z returns for the reporting month, if:
- the register is prepared and kept only electronically, and
- cash operations are not recorded in the register in compliance with regulatory enactments on recording cash operations, and
- it is possible to provide an option upon request by controlling institutions to issue a paper printout of the electronically prepared and kept register corresponding to the time necessary for audit.
- Remove the requirement to record payments received (where a registered receipt should be prepared upon request of a transaction partner) in the income accounting register.
- Specify mandatory use of cash registers starting from 1 July 2010 in places where cash transactions take place: for entrance fees, lease of inventory and other additional services at sports, cinema, culture and entertainment events, for entrance fees in museums, historical objects, botanical gardens, zoos, open air objects, amusement parks. Only state and municipal institutions will be released from this requirement.
- Specify mandatory use of cash registers by wholesalers.
- Release licence (patent) fee payers from using cash registers. Licence fee payers will have to fill in a registered receipt to confirm a payment received upon request by a transaction partner.
- Determine release from using a cash register starting from 1 July 2010; however a payment received in cash may be confirmed by a registered receipt for services provided outside the regular place of operation (structural unit) if the payment is received at a place of service provision, as well as for sale of self acquired or produced goods at their place of production (except public catering places) or supply to buyers on site or repair of these goods.
Return to top
4. AMENDMENTS EXPECTED IN THE NEAREST FUTURE
On 23 March 2010, a meeting of the CM supported several amendments initiated by the Ministry of Finance in relation to implementation of a new business – a micro enterprise.
Current tax laws do not provide a special taxation procedure for micro enterprises. For this reason several draft laws have been prepared. These contain amendments to PIT, CIT Laws providing that owners of micro enterprises and employees do not apply general norms of CIT and PIT Laws; however, from income gained they pay a tax under the new law On Micro enterprise Tax.
Under the draft law On Micro enterprise Tax, an individual trader, individual enterprise, farm or fish farm, economic operator registered with the SRS (natural person), as well as a limited liability company (micro enterprise) can choose to pay micro enterprise tax on condition that:
- Shareholders (if any) are natural persons (in the case of a limited liability company the shareholders are also members of its management board).
- Turnover does not exceed LVL 70,000 in a calendar year.
- The number of employees at any time does not exceed five (unless an employee is absent or dismissed).
The draft law On Micro enterprise Tax provides that tax will be 20% of turnover or income of micro enterprise business operations. This will be paid by owners and employees of the micro enterprise.
Although the tax rate is smaller than for an employee or an economic operator, nevertheless in contrast to, for example, the general procedure of PIT Law application, the annual taxable income of an employee/owner of a micro enterprise will not be subject to an annual untaxed minimum, allowances for dependent persons, and justified expenses. Moreover, business losses incurred by the payer, namely, the owner of the micro enterprise will not be allowed to be brought forward to the following taxation years upon determining the taxable income from business operations.
We will inform you in detail about the expected changes in the near future.
Return to top
5. SORAINEN NEWS
5.1. SORAINEN Tax team represents Royal Boskalis Westminster N.V. in relations with Latvian tax authorities
SORAINEN represented Royal Boskalis Westminster N.V., a leading global services provider operating in the dredging, maritime infrastructure, and maritime services sectors, in relations with the Latvian tax authorities. Due to the specifics of dredging services and lack of guidelines from Latvian state institutions, Royal Boskalis Westminster N.V. applied to the tax authorities for an advance ruling whether a special income tax regime applies to Latvian seamen employed on board dredgers used in international transport. The initial view of the tax authorities was that special income tax does not apply to these seamen. However, after a successful appeal against this ruling, the Ministry of Finance agreed with the arguments presented, and allowed application of the special tax regime to include Latvian seamen employed on dredgers. In addition, the tax authorities gave another positive ruling that the suggested documentation is sufficient to reclaim from the state tax overpaid so far.
5.2. A SORAINEN invitation
Once again, SORAINEN would like to contact readers who have faced difficulties in recovering overpaid VAT until the coming into effect of amendments to Section 16, Clause 10 of the TD law in 2003 whereby taxpayers’ right to recover VAT overpayment from the state were limited by setting a three year time limit. We are ready to assist you as well!
5.3. Seminar offer on tax news
SORAINEN Tax team lawyers offer to organise specialist seminars on tax amendments operative from 1 January 2010 (for more information please see Latvian Tax Newsflashes No 18 and No 19) for employees of our client companies. Seminar topics depend on each client’s interest in a particular theme and on the specific character of their business. An agenda will be tailored specially for client needs and most important issues. For additional information or seminar applications, please contact Jānis Taukačs by e-mail.
5.4. Read the latest publications by specialists of the SORAINEN Tax team
- Senior associate Diāna Kļuškina published an article in iFinanses.lv and the magazine Saldo: “Income from shares and their disposal”, “Income gained abroad by a Latvian enterprise, its inclusion in income subject to corporate income tax”, “Foreign income”.
- Associate Alisa Šurko’s article in the magazine Bilance: “On the new annual report of personal income”.
- Partner Jānis Taukačs’ blog in portal Db.lv: “Why do 96% Americans consider paying taxes as their duty?”
All these publications, as well as the archive with previous SORAINEN tax publications, are available here.
Return to top |
