On March 22, the law “On Measures to Prevent and Manage National Threats and Consequences of COVID-19” (Law) was passed. The law enters into force retroactively, as of 12 March 2020, when a state of emergency was declared in Latvia. The law contains provisions on the following tax items.
1. Extension of payment of taxes without penalty for 3 years
The SRS can split delayed taxes or delay them for up to 3 years. No later than 2 months after the due date for tax payment or the date of entry into the force of the Law the taxpayer must submit a reasoned application. If payment deadlines are not met, the SRS can cancel the decision and apply penalties for the outstanding part of the debt for the whole delay in the amount of 18.25%.
2. Municipalities – Right to Extend Term for Payment of real estate tax
In 2020, municipalities can set different real estate tax payment deadlines than laid down in the Immovable Property Tax Law and transfer them to a later period in 2020
3. Performers of economic activity need not pay personal income tax (PIT) advance
PIT payers who are performing economic activity need not make PIT advance payments (starting from 1 January 2020); no penalties will be applied for not making advance payments. However, advance payments can be made on a voluntary basis.
4. Faster VAT refund
As of April 1, the SRS will make approved VAT refunds within 30 days of the VAT return submission deadline, without accruing until the end of the year. This also applies to VAT which accrued under VAT returns for the first months of this year.
5. Exemption of excise duty on undenatured alcohol
Excise duty exemption will apply for undenatured alcohol used for manufacturing disinfectants containing alcohol content, if purchasing or production of denatured alcohol is significantly impaired or impossible because of Covid-19. SRS may allow reduction of overall excise duty up to 90% to merchants holding a special permit for approved warehouse keeper operations and that are producing alcohol.
6. Sale of excise goods under distance contract
Sale of excise goods is now allowed by means of distance contracts (except tobacco and liquids used in electronic cigarettes). But sale of alcoholic beverages is banned for under-18s and for everyone from 22.00 to 8.00.
7. SRS support for participants in the enhanced cooperation programme
In 2020, 2021, 2022 and 2023 SRS need not make a negative decision regarding members of the Enhanced Cooperation Programme if they are affected by the crisis caused by Covid-19 and the members provide objective evidence of the circumstances.
8. Downtime allowance
Employees in downtime in sectors affected by the crisis will be reimbursed via a downtime allowance of up to 75% of their average remuneration for the previous six months, up to a maximum of EUR 700 per calendar month. Downtime allowance will not be taxed with PIT and mandatory payments of State social insurance. Payment of the downtime allowance ends if the employer hires new employees while receiving the allowance.
9. Deadline for filing annual tax reports
Companies that are subject to the Law on the Annual Financial Statements and Consolidated Financial Statements may file their 2019 annual report and consolidated annual report up to 3 months later than the usual statutory deadline.
10. To Be Continued…
The CoM will identify sectors that are most affected by the virus and will require a longer period of time to overcome financial difficulties.
CoM Emergency Order is available HERE.