Ņikijs grāmatvedība - News

The Foreign Affairs Committee: Latvian businesses must be provided with equal opportunities in the transportation of goods of strategic importance

Sun, 03 Nov 2024 10:18:00 +0000

To ensure equal competitive opportunities for Latvian carriers in comparison with foreign businesses when transporting goods of strategic importance, the Foreign Affairs Committee of the Latvian Parliament (Saeima) on Thursday, October 31, conceptually supported amendments to the Law on the Circulation of Goods of Strategic Importance.

Currently, local carriers transporting strategic goods in transit, including goods supporting Ukraine and military cargo, face additional restrictions, as existing regulations require local carriers to obtain both a license and a permit for such cargo, while foreign carriers only need a permit. Representatives from the Ministry of Foreign Affairs clarified this during the committee meeting.

The amendments propose that Latvian-registered carriers transporting goods of strategic importance in transit will only need a permit issued by the country from which the cargo is exported or to which it is imported. This will ensure equal control and competitive conditions for Latvian and foreign carriers. Additionally, it is planned to eliminate the import license requirement for dual-use items.

The amendments also stipulate that, moving forward, the Ministry of Defense will issue business licenses for military manufacturers for a limited period of nine years. Furthermore, re-registration of already issued licenses is planned every three years. The Ministry of Defense will have the right to suspend an existing license for up to six months if additional inspections are needed, according to the explanatory note for the bill. Currently, such licenses are issued without a time limit.

The changes also aim to assign the issuance and inspection of civilian firearm transfer permits within the European Union exclusively to the State Police, to avoid duplicating the functions of multiple institutions.

Moreover, to improve the traceability of firearm accessories, such as silencers or scopes, in the domestic circulation, it is proposed that firearm dealers be required to register each buyer of a firearm accessory.

For these amendments to take effect, they must be supported by the Saeima in three readings.

Information from the Latvian Parliament (Saeima).

Starting from January 1, 2025, the national minimum monthly wage will be increased from 700 euros to 740 euros

Tue, 29 Oct 2024 15:00:00 +0000

This is stipulated by the regulations adopted at the government meeting on Tuesday, October 29, titled "Amendment to the Cabinet of Ministers Regulations No. 656 of November 24, 2015, 'Regulations on the Minimum Monthly Wage within Normal Working Hours and Calculation of the Minimum Hourly Tariff Rate.'"

Minister of Welfare Uldis Augulis emphasizes: "Next year, the minimum monthly wage will increase by 40 euros. We are beginning the transition to a new system, where the minimum wage will be set as a percentage of the average wage in the country. This will undoubtedly improve the financial situation and living standards of lower-paid employees."

The adopted regulations apply to employers and employees. According to data from the Central Statistical Bureau (CSB) on the number of employees with income up to or at the level of the minimum wage, in 2023, out of 131,584 employees in the private sector, 99,270, or 18.6% of those employed in the private sector, earned the minimum wage, while in the public sector, there were 29,012 employees, or 12.6% of those employed in the public sector.

Between 2020 and 2023, the share of employees earning the minimum wage or less in the public sector slightly increased from 10.4% in 2020 to 12.6% in 2023, whereas in the private sector, the proportion of those earning the minimum wage decreased from 21.2% to 18.6%.

In 2023, there were 822,489 employed people in Latvia.

Information from the Cabinet of Ministers of the Republic of Latvia

Foreign investors propose reducing overtime pay; the proposals still need to be discussed

Tue, 29 Oct 2024 14:33:00 +0000

It is necessary to reduce the overtime pay supplement across all economic sectors, setting it at 50% instead of double pay as it currently stands. However, if there is a collective agreement in the sector, the overtime pay supplement should be up to 20%. This proposal was presented by the Foreign Investors’ Council in Latvia (FICIL) at the Human Capital Development Council meeting on Thursday, October 24.

According to the Employers’ Confederation of Latvia (LDDK), Latvia is currently the only country in Europe where overtime is paid at a 100% rate.

FICIL believes that the existing regulation in sectors where there are general agreements often does not work in practice, and these changes could reduce the shadow economy, for example, in the construction sector. During the meeting, FICIL presented 12 proposals for amendments to the Labor Law, which are planned to be discussed in the coming months.

In light of the intense discussions that arose during the meeting, Minister of Economics Viktors Valainis called on all parties involved to provide a specific assessment of each FICIL proposal for the next meeting. Additionally, a broader collection of information on how labor law practices are handled in other countries is required. "The international aspect is still greatly missing," said V. Valainis.

FICIL also proposes withholding part of the final salary in cases where an employee, upon ending employment, has not returned company equipment or other items.

The Human Capital Development Council is known to be a collegial body consisting of three ministers — for the economy, education and science, and welfare. It was established to implement coordinated interdepartmental cooperation and make decisions on planning, developing, implementing, and monitoring necessary labor market adjustments to foster human resource development in line with future labor market demands and structural changes in the economy aimed at creating higher added value to benefit society as a whole. The council is chaired by the Minister of Economics. To improve the management of human capital development issues and promote dialogue between all parties involved in addressing these issues, amendments to the regulations of the Human Capital Development Council were approved at the Cabinet of Ministers meeting on August 20, following the Ministry of Economics' initiative. The amendments stipulate that, in the future, representatives from Latvia's largest and most influential business and trade union organizations will also participate in the Council's work in an advisory capacity, including the Free Trade Union Confederation of Latvia, the Foreign Investors' Council in Latvia, the Employers’ Confederation of Latvia, the Latvian Exporters Association "The Red Jackets," and the Latvian Chamber of Commerce and Industry.

Information from the Ministry of Economics of the Republic of Latvia.

A draft law on cash regulation has been submitted for public consultation

Tue, 20 Aug 2024 13:29:00 +0000

On Tuesday, August 20th, the Ministry of Finance (MF) submitted a draft law titled "Amendments to the Law on Taxes and Fees" for public consultation on the Legal Acts Drafts Portal. These amendments are designed to more effectively monitor cash circulation and promote the use of cashless payments in transactions. The amendments introduce several significant changes and were prepared as part of the measures included in the Shadow Economy Limitation Plan for 2024–2027.

The amendments delegate to the Cabinet of Ministers the authority to determine cases where entities subject to the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing are required to submit a threshold declaration to the State Revenue Service (VID) using the Financial Intelligence Service’s receipt and analysis system. Currently, the Law on Taxes and Fees specifies only one particular entity and case where a threshold declaration must be submitted to the VID using the Financial Intelligence Service's receipt and analysis system. In the future, the State Revenue Service will receive information about cash transactions exceeding 750 EUR.

Additionally, the proposed amendments stipulate that banks and service providers will be required to report to the VID once a year on cash transactions of their clients—individuals—if their total annual amount exceeds 7,000 euros. Currently, the VID receives information on individuals whose account turnover for the previous year exceeds 15,000 euros. Consequently, information on cash deposits, combined with the existing data provided by banks and payment service providers, will enable more effective identification and timely prevention of tax evasion risks.

Furthermore, for taxpayers with an annual turnover exceeding 50,000 euros, the amendments to the law require them to provide customers with the option to make payments for services and retail transactions also in a cashless form.

The current regulations stipulate that taxpayers in wholesale trade must only conduct cashless transactions, including payments by card. According to the Law on Taxes and Fees, wholesale trade is defined as the sale of purchased goods in the name of the economic operator for resale, production, or ensuring its own activities. Therefore, the proposed regulation will affect service providers and retailers who will be required, in addition to existing cash payments, to offer customers the option to pay by cashless means.

The draft law is available for review on the Legal Acts Drafts Portal.

Information from the Ministry of Finance of the Republic of Latvia

The Fiscal Risk Declaration has been submitted for consideration to the Cabinet of Ministers

Sat, 17 Aug 2024 10:07:00 +0000

The Ministry of Finance has prepared and submitted for consideration at the Cabinet meeting the annual informative report on the Fiscal Risk Declaration. In the context of the declaration, fiscal risk refers to the probability that the basic fiscal indicators will deviate from their projected values during budget execution.

To achieve the objective of fiscal risk management, the Ministry of Finance, in collaboration with state institutions, assesses the fiscal impact and probability of occurrence of identified risks, and necessary measures to mitigate or prevent these risks are developed or refined. To stabilize the impact of risks, a fiscal safety reserve is provided, the amount of which depends on the impact of the risks on fiscal indicators and must not be less than 0.1% of the Gross Domestic Product (GDP) annually.

The annually analyzed quantifiable and non-quantifiable fiscal risks include state and municipal guarantees, state loans, risks in the welfare sector and financial sector, contributions to the European Union (EU) budget, EU fund program expenditures, state commitments to make capital contributions on demand, fiscal risks of the economic activities of state-owned enterprises classified in the general government sector, court rulings, and many others. Most risks exhibit a symmetry characteristic, meaning that the probability and amplitude of positive and negative deviations are similar, and the impact of such risks in the long term is close to zero. Accordingly, such risks do not pose a threat to the stability of fiscal indicators in the medium term. The calculation of the reserve includes fiscal risks arising from state loans and state guarantees.

It should be noted that comprehensive and significant macroeconomic shocks and extraordinary situations are not directly analyzed in the declaration but are assessed separately in aspects that could potentially have a significant impact on public finances and their stability. These aspects include the analysis of state-owned enterprises not classified in the general government sector, the evaluation of guarantees, debt, and its sustainability in the general government sector, but in these cases, no reserve calculation is made.

The scope of the declaration expands over time, taking into account the relevance of issues. This year, the section on the impact of climate change has been expanded in the declaration, including a new subsection titled “Green Budget.”

The preparation of the declaration and determination of the amount of the fiscal risk reserve is an integral part of the preparation of the state budget bill for the current year and the medium-term budget framework, as the available fiscal space for financing priority measures is determined, taking into account the amount of the fiscal safety reserve calculated within the framework of the declaration. When reviewing the declaration, the Cabinet of Ministers will decide on the amount of the fiscal safety reserve. This year, it is proposed that the fiscal safety reserve for 2025–2027 be set at the minimum level specified in the Fiscal Discipline Law, namely 0.1% of GDP (an average of approximately €47 million), thereby providing a “safety cushion” for cases where macroeconomic and fiscal indicators deviate from their planned values.

The informative report is available on the Legal Acts Drafts Portal.

Information from the Ministry of Finance of the Republic of Latvia

It is intended to promote the development of instant payments in Latvia

Tue, 25 Jun 2024 19:22:00 +0000

On Tuesday, June 25, the government approved two prepared draft laws to ensure equal competitive conditions for payment service providers. This will expand the opportunities for providing payment services, which, in turn, may positively affect the prices of such services.

The amendments aim to promote the payment sector, especially the development of instant credit transfers or instant payments. Payment institutions and electronic money institutions licensed in Latvia, other European Union countries, and European Economic Area countries that provide payment services will be able to become direct participants in the payment system. This will further promote competition and ensure equal conditions for the provision of payment services.

An institution wishing to become a direct participant in the payment system will need to ensure compliance with the requirements mentioned in the Law on Payment Services and Electronic Money, which may necessitate additional improvements to the institution's procedures and investments in new technical solutions.

Draft law on amendments to the Law on Payment Services and Electronic Money.

Amendments to the Law on Settlement Finality in Payment and Financial Instruments Settlement Systems.

The draft laws still need to be reviewed by the Saeima.

Information from the Ministry of Finance of the Republic of Latvia.

A draft law that will reduce administrative burden and promote cooperation with taxpayers has been submitted for public consultation

Fri, 14 Jun 2024 05:28:00 +0000

The Ministry of Finance has submitted amendments to the Law "On Taxes and Duties" (draft law) for public consultation on the Legal Acts Project (TAP) portal. These amendments include several significant changes and clarifications aimed at reducing the administrative burden for both taxpayers and the administration.

To promote cooperation with taxpayers and simultaneously reduce the administrative burden, the draft law proposes improving the regulation of penalty calculations. It stipulates that penalties for late payments of taxes (excluding customs duty), fees, and other state-mandated payments in the unified tax account will be calculated only twice a month, on the 1st and 15th of each month. Moreover, penalties will not be calculated if the overdue tax payment is received by the next penalty calculation date. Additionally, penalties will not be calculated if a declaration is submitted late, but a payment has been made into the unified account by the due date, which has not been used to cover other liabilities at the time of submission.

Given the increased costs of tax debt collection, the draft law proposes raising the threshold for initiating tax debt collection from 15 to 40 euros. However, the uncollectible tax debt threshold remains unchanged for property tax and will continue to be 15 euros.

To ensure clear and consistent interpretation of legal norms, the draft law proposes excluding the signs of suspicious transactions in the field of taxation from the law. This means that a subject of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (Prevention Law) will report a suspicious transaction to the State Revenue Service only if there is suspicion that the funds involved in the transaction were obtained directly or indirectly as a result of a criminal offense in the area of state revenue.

Considering the applicability of the new European Union de minimis aid regulation, from June 30, 2024, the draft law plans to exclude de minimis aid in the fisheries sector from the law – the tax administration's right to reschedule or defer overdue tax payments for up to five years if the Cabinet of Ministers has approved the opinion prepared by the Ministry of Agriculture on the need to support a specific taxpayer in the fisheries sector in overcoming financial difficulties related to the restrictions imposed by Russia. It should be noted that since August 1, 2022, all taxpayers whose economic activities have been adversely affected for a prolonged period by circumstances of force majeure have access to a support solution – an extended tax payment deadline of up to five years. This permanent legal support regulation has been developed to avoid creating new support regulations in several laws related to overcoming specific crises when the tax payment deadline delay is caused by specific force majeure circumstances, including the armed conflict initiated by Russia in Ukraine.

To limit unregistered economic activity, tax evasion, and other violations, such as illegal and unauthorized trade of goods in the global network, the draft law includes regulations allowing the State Revenue Service to not only disable and suspend domain names but also restrict access to domain names or IP addresses in the territory of Latvia. Thus, the regulation included in the draft law expands the State Revenue Service's ability to act promptly and make decisions regarding domain names registered outside the Latvian zone.

To ensure the correct inclusion of information in the unified electronic working time accounting database, the list of information to be included in the electronic working time accounting system for persons employed at construction sites, as well as for employers and construction initiators, is supplemented. Correct inclusion of information in the said database will improve data quality, thereby enhancing the effectiveness of risk analysis.

The draft law can be viewed on the Legal Acts Project portal.

Information from the Ministry of Finance of the Republic of Latvia

Evaluations of the natural resources tax, VAT, and other tax regimes have been prepared

Thu, 13 Jun 2024 19:43:00 +0000

Based on the opinions and proposals expressed at the meetings of the Tax Policy Improvement Coordination Group, an assessment of the current situation with the natural resources tax and climate taxes has been developed, along with potential proposals for further action. An assessment of the current situation of small tax regimes has also been prepared, providing data-driven insights into the application of these regimes in Latvia and the influencing factors, as well as an evaluation of the current situation of value-added tax (VAT) with suggestions for further discussion.

The evaluation of the natural resources tax and climate taxes includes key indicators such as tax revenues, their share in the gross domestic product (GDP), tax exemptions, and a discussion on the future climate tax policy. Both tax rates and revenues have been compared among the Baltic States. In addition to their goals of limiting environmentally and climate-damaging activities, globally, natural resources and climate taxes are also viewed as financial resources to support a growth-promoting tax structure and appropriate government expenditures.

Given that Latvia must start the second phase of the Emission Trading System (ETS 2) from 2027, an evaluation was conducted on how to implement a gradual transition to expanding the ETS system. The evaluation includes information on the potential positive impact of the discussed proposals on the state budget, which would facilitate state support in matters related to environmental improvement.

The assessment of small tax regimes analyzes the possibilities of their application in Latvia and the factors influencing the choice of such regimes. It provides an overview of the number of taxpayers using one of the currently available small regimes, the total amount of revenue, and the current challenges. The material analyzes different forms of economic activity, their provided opportunities, and possible necessary solutions to address deficiencies. The importance of social insurance in the context of economic activity and the attraction of labor for short-term jobs is also examined.

Although the overall contribution of these regimes to tax revenues is small, they affect a significant number of Latvian residents. Interaction with one of the small tax regimes shapes the attitude of economic operators towards tax payment, understanding of equal competition conditions in the business segment, and perception of social security through the linkage of social contributions with received services and the general sense of whether the tax system is fair to those in similar conditions. In the context of the shadow economy, individuals working in one of these regimes are regularly mentioned as being in a high-risk area.

The main dilemma of small regimes is between the desire to simplify as much as possible the administrative and tax burden for small and/or irregular business operators with limited administrative resources. Thus, the tax aspects should not encourage participation in the shadow economy and should prevent the possibility of using these regimes to avoid tax payments or significantly reduce the amount of regularly paid taxes.

The VAT assessment compares Latvia with European Union member states. Both standard and reduced VAT rates are compared among countries. Indicators such as VAT revenues and their influencing factors, state foregone revenues resulting from the application of reduced rates and exemptions, and the VAT gap are evaluated. Analyzing VAT revenues in Latvia, it is concluded that they are increasing in absolute terms and as a share of GDP. In 2023, VAT revenues amounted to 9.6% of GDP, which is 0.3 percentage points higher than in 2022. Comparing Latvia's VAT revenue share of GDP with other EU member states, in 2022 it ranks 4th, surpassing Lithuania and Estonia and exceeding the EU-27 average of 7.5%.

The data collected in this evaluation indicate that the VAT system in Latvia works well overall and VAT is currently one of the most important sources of state revenue. Compared to the other Baltic States, reduced rates in Latvia are already applied to a wide range of goods and services. The existing VAT rate structure (reduced rates and their targeting) generally ensures that the share of VAT expenses in households with the lowest incomes is moderate compared to other EU member states. The evaluation includes information on the potential impact of the discussed proposals on the state budget, which would facilitate state support in meeting residents' expenditure needs.

During the development of proposals, discussions were held with social and cooperation partners, including the Employers' Confederation of Latvia, the Free Trade Union Confederation of Latvia, the Latvian Chamber of Commerce and Industry, the Foreign Investors' Council in Latvia, and others.

The assessments can be found in the section "Materials for the development of national tax policy guidelines" on the website of the Ministry of Finance.

For comments and proposals, please write to the email nad@fm.gov.lv by June 27.

Information from the Ministry of Finance of the Republic of Latvia

Starting from July 1, a new simplification for recognized businesses – centralized customs clearance – will be available to customs clients

Wed, 12 Jun 2024 14:37:00 +0000

In accordance with the European Union's regulatory framework in the customs field, starting from July 1 of this year, a new functionality – centralized customs clearance – will be introduced in the Automated Import System (AIS) for goods when submitting an import declaration.

Centralized customs clearance provides new opportunities for customs clients to review their business processes, optimize logistics flows, and consequently reduce costs. To use the new AIS functionality, a business must obtain a Centralized Customs Clearance permit.

The Centralized Customs Clearance permit can only be granted to holders of the Authorized Economic Operator for Customs Simplifications (AEOC) status.

A legal entity that has received the Centralized Customs Clearance permit can submit an import declaration to the customs authority of the country where it conducts its business, while simultaneously presenting the goods to the customs authority of another member state. The customs duty will be paid to the customs authority where the import declaration is submitted.

To obtain a Centralized Customs Clearance permit, a business must submit an application through the European Union's unified European Customs Decision System. Information on accessing the system and submitting an application is available on the SRS website.

Information from the State Revenue Service

Many are upset about the increase in tax rates for goods imported from the Russian Federation and Belarus

Wed, 12 Jun 2024 11:34:00 +0000

On the 1st of July 2024, the Council Regulation (EU) 2024/1652 will come into force, amending the Annex I to Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff (published in the Official Journal of the European Union on 10.06.2024, hereinafter referred to as Regulation (EU) 2024/1652). This regulation establishes increased customs duty rates for the import of cereals, oilseeds, products derived from them, as well as beet pulp and pellets, and processed peas originating from or exported directly or indirectly from Russia and Belarus. The customs duty rate will increase up to EUR 95 per tonne or a 50% ad valorem customs duty rate (i.e., a percentage-based customs duty on the customs value of the goods), depending on the product.

The changes introduced by Regulation (EU) 2024/1652 will apply to products classified in the following Combined Nomenclature sections:

* Edible vegetables and certain roots and tubers;

*Cereals;

* Oilseeds and oleaginous fruits; miscellaneous grains, seeds and fruits; industrial or medicinal plants; straw and fodder;

* Vegetable plaiting materials; vegetable products not elsewhere specified or included;

* Animal or vegetable fats and oils and their cleavage products; prepared edible fats; animal or vegetable waxes;

* Residues and waste from the food industries; prepared animal feed.

Currently, these products are subject to zero or relatively low customs duty rates.

The Annex to Regulation (EU) 2024/1652 amends Annex I to Council Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff dated July 23, 1987, which is revised annually. In 2024, Commission Implementing Regulation (EU) 2023/2364 of September 26, 2023, amending Annex I to Council Regulation (EEC) No. 2658/87 on the tariff and statistical nomenclature and the Common Customs Tariff, is in force.

Furthermore, to prevent Russia and Belarus from benefiting from the Union's tariff quotas with Most-Favored-Nation treatment, Union tariff quotas, allowing the import of goods at reduced or zero customs duty rates, will not apply to products listed in the Annex to Regulation 2024/1652 originating from Russia or Belarus, or exported directly or indirectly from these countries.

Please note that certain products listed in the Annex to Regulation (EU) 2024/1652, for which the customs duty rate is increased, are prohibited from being imported into Latvia in accordance with Cabinet Regulation No. 158 of March 5, 2024, "Regulations on the importation (import) of agricultural and animal feed products prohibited in Latvia."

State Revenue Service information