Dear clients and cooperation partners,
On 1 July this year, the In-Depth Cooperation Programme (the Programme) was launched in Latvia. The purpose of the Programme is to facilitate closer and more effective cooperation between taxpayers and the tax authorities – the tax authorities would create a so-called “white list” of companies that would benefit from closer cooperation with the tax authorities.
Programme members will obtain several benefits:
- faster return of value added tax (VAT);
- an individual adviser at the State Revenue Service (SRS);
- monthly notification of non-compliance of data in tax and information returns with the information available to the SRS;
- faster replies to the taxpayer's applications (except rulings);
- in specific cases, privileged access to the transit procedure, release from submission of the guarantee for the customs debt, VAT debt and excise tax debt and the option to apply a 100% decrease of the general excise tax security to the holder of a warehouse of excise goods.
Moreover, the Ministry of Finance is summarising proposals on supplementing the list of benefits.
Criteria to qualify for Programme membership
Cabinet Regulations No. 459 “Regulations on Operation of the In-Depth Cooperation Programme” of 26 June 2012 (CM Regulations) lay down the criteria to qualify as a Programme member, including:
- the taxpayer has no tax debts exceeding LVL 100 (approx EUR 142);
- the taxpayer is solvent and there is no on-going legal protection procedure against the taxpayer;
- the taxpayer or its representative has not been found guilty of material violations with regard to the taxpayer's business;
- the salaries of the taxpayer's employees exceed the average salary in the particular industry;
- the taxpayer has not undertaken transactions lately with the total amount exceeding LVL 1,000 (approx EUR 1,423) with a taxpayer whose operations are suspended by the SRS.
Thus the taxpayer should avoid entering into transactions with companies that fail to arrange the correct recording of income or transactions subject to taxes and duties or that turn out to be fictitious (do not perform business, cannot be contacted, or avoid tax inspections).
Within 12 months of the Programme being launched – that is as of 1 July 2013 – the taxpayer must ensure compliance with additional criteria:
- the number of employees is not less than 25, the turnover amounts to LVL 3 million (approx EUR 4.3 million) a year, and the total amount of taxes paid to the state budget exceeds LVL 500,000 (approx EUR 711,435) in a taxation year;
- the taxpayer has implemented an internal tax risk management and control system.
How to become a member?
By the end of the year, the Ministry of Finance has to develop criteria for the tax risk and control system.
Companies, in turn, should have a plan in place to gain the tax administration's trust and be able to join the Programme. In our opinion, special attention should be paid to the following:
- the control of the tax control system;
- the control system of transaction partners.
If you have any questions or need legal assistance in relation to qualification for the Programme, including drafting an application, assistance in application revision at the Programme commission stage, implementation of the tax and transaction partner control system, send an e-mail to SORAINEN regional head of the Tax & Customs Team, Jānis Taukačs: firstname.lastname@example.org; or call +371 67 365 000, or contact your usual legal adviser.