Corporate Tax 2010 - BMR Advisors

Chapter 29
Latvia
Zinta Jansons
Klavins & Slaidins LAWIN
Elina Girne-Berzina
1 General: Treaties
Rates of state (stamp) duties are set by various laws and regulations.
1.1 How many income tax treaties are currently in force in
Latvia
There are currently 48 bilateral income tax treaties in force in
Latvia.
1.2 Do they generally follow the OECD or another model
They generally follow the OECD model but in some cases the UN
or US model is followed.
1.3 Do treaties have to be incorporated into domestic law
before they take effect
Treaties must be ratified by the Latvian parliament before they take
effect.
1.4 Do they generally incorporate anti-treaty shopping rules (or
“limitation of benefits” articles)
As a general rule most Latvian income tax treaties do not include
express limitations of benefits articles. Exceptions include treaties
with the US, Singapore, and Kazakhstan.
1.5 Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)
According to Latvian law international treaties supersede domestic
legislation.
2 Transaction Taxes
2.2 Do you have Value Added Tax (or a similar tax) If so, at
what rate or rates
Supply of goods and provision of services are subject to Value
Added Tax in Latvia. The applicable rates are:
general rate of 21% (applied on majority of supply of goods
and services);
reduced rate of 10% (applied on supplies of medicines,
specialised products intended for infants, heating and power
supplies to residents, etc.); and
zero-rate of 0% (applied on export of goods, tourism-related
services, services which, according to VAT Law are not
supplied domestically).
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
VAT is applicable to all supplies of goods and services, unless
exemption applies to the particular type of transaction under the
law. For instance, VAT is not imposed on such deliveries of goods
and services as medical services, entrance fees to various cultural
events specified by law, insurance and re-insurance services
provided by insurers and insurance brokers, various types of
financial transactions and other items. The law also provides for
various activities that fall outside of the regulation of the scope of
the VAT Law, for instance, VAT is not applicable to contractual
penalties, security deposits, down payments, membership fees,
indemnities for insurance events paid by insurance companies, cost
reimbursements that do not constitute payments for delivery of
goods or provision of services, amounts received as a result of
assignment of claim rights and other activities.
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
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2.1 Are there any documentary taxes in Latvia
There are state (stamp) duties in Latvia. The stamp duties are
payable for a number of actions including, but not limited to,
execution of notarial deeds if, for instance, an agreement executed
in relation to the relevant transaction requires notarial certification;
for registration filings with the Register of Enterprises and upon
registration of corporate changes as well as upon registration of
ownership title and security interest in respect to real estate with the
Land Register.
Input tax deductions can be made only by those persons who, in
accordance with the procedure set by law, are registered with the
Register of VAT Payers. However, not in all cases the registered
VAT payers are able to deduct value added tax in full amount
thereof.
Deductions can be made in respect of almost all VAT taxable
amounts which are paid by a taxpayer on goods and services for the
purpose of ensuring its VAT taxable transactions. In certain cases
the applicable regulation provides for special procedure for input
tax deductions and tax adjustments, for instance, in respect of real
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