Navigation path

Measures List
First Prev Next Last Separator
Measure Name
Date when measure came into force
Tax allowance 2014/01/01
Results 1 - 1 of 1.

Generic Tax Name Corporate income tax
Tax name in the national language Uzņēmumu ienākuma nodoklis
Tax name in English Corporate income tax
Member State LV-Latvia
Tax in force since 1991/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Law "On Profit Tax" (in force from January 1,1991 till March 31, 1995).

Law "On Corporate Income Tax" (in force from April 1, 1995).

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope Territory of Latvia.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

As from 2013 taxable income does not include the income from alienation of shares (excepted for commercial companies – residents of low tax or no tax countries or territories).

Dividends paid to entities in low tax or no tax countries or territories are subject to a withholding tax at 15% rate (30% for extraordinary dividends). Dividends received from the above mentioned entities shall be include in the taxable income of the recipient and subjected to tax at the generally applicable rate of 15%. 

Capital gains - at the determination of taxable income, income or losses arising as a result of alienation of publicly traded securities shall not be taken into account as well as income or losses from the alienation of shares.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments

 

 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate 10.0 %
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

The CIT law does not define for depreciation a minimum or maximum period and the rates range from 10 to 70%.

Assets of a similar type acquired in the same year go into a “pool”. Depreciation is then computed for all assets in the same pool as a single calculation. For CIT calculation purposes, 4 different "pools" are applicable; depreciation rates are 15%, 20%, 40%, and 70% per year. 

Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Assets of a similar type acquired in the same year go into a “pool.” Depreciation is then computed for all assets in the same pool as a single calculation. For CIT calculation purposes, 4 different "pools" are applicable, depreciation rates are 15%, 20%, 40%, and 70% per year. 
The tax allowance to the new production technology equipment (by a coeficient of 1.5);
From 1 July of 2014 new allowance - the promotion of research and development, where the taxable person is entitled to reduce taxable base by the, expenditure associated with the development of research and development work, applying a coefficient of 3.

Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

The straight-line depreciation method is applicable to concessions, patents, licences and trademarks.

Good will is not-depreciable.

The average depreciation period is 5-10 years.

The average depreciation period for concessions is 10 years.

Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

A company may not deduct interest expense incurred on payments made to another entity that exceed the lower of the following amounts:interest exceeding 1.57 time the avarage short term credit rate; and a 4:1 debt to equity ratio.


Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments

Losses incurred in taxation periods up to 2007 can be carried forward for 8 years.



Comments
 
Rate(s) Structure
Nominal corporate income tax rate Rate: 15.00 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 15.00 %


Comments

Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 9.00 %


Comments

Micro-enterprise tax is set up with a purpose encouraging business activity and reduce administrative burden for small entrepreneurs. The rate of micro-enterprise tax is 9% from turnover. From 2015 after three years of being micro-enterprise, for the part of turnover exceeding 7,000 EUR a year, the tax will be applied at 12%.  The tax replaces state social contributions both for employees and proprietors and business risk state fee as well as personal income tax or corporate income tax depending on legal form of taxpayer. Legal form of microenterprise could be Limited Liability Company or individual merchant or individual performing economic activity without registration as an individual merchant. To qualify for status of micro-enterprise taxpayer the following criteria shall be met: employee’s income does not exceed 720 EUR per month, turnover does not exceed 100,000 EUR per year, the number of employees does not exceed five.

 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 15.00 % 15.00 %
Outgoing dividends withholding tax 0.00 % 30.00 %
Outgoing interest payments withholding tax 0.00 % 15.00 %
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

1) outgoing dividends withholding tax - dividends paid to entities in low tax or no tax countries or territories are subject to a withholding tax at 15% rate (30% for extraordinary dividends). Dividends received from the above mentioned entities shall be include in the taxable income of the recipient and subjected to tax at the generally applicable rate of 15%.

2) outgoing interest payments withholding tax - interest  paid to entities in low tax or no tax countries or territories are subject to a withholding tax at 15% rate


Comments   Non-treaty countries

CIT at a rate of 15% must be withheld from any payments to legal, natural persons located or established in low-tax or no tax countries or territories, to their representatives or into third party bank accounts, including from interest payments – at 5% rate, if such payments are made by Latvian credit institutions, or at 15% rate - from all other interest payments; or at 15% rate - from payments for intellectual property; from extraordinary dividends – at 30% rate.

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
1995/04/01
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio: 1 : 4
Definition numerator
Definition denominator The amount of own capital reflected in the taxpayer’s annual accounts, which is reduced by the reserves, which have not been created as a result of the profits sharing
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

1. Before submission of tax declaration (Large enterprises (balance sheet value > 1.4 mln. euros; net turnover > 3.4 mln. euros; average number of employees > 250) until 1 August of the following year but medium and small enterprises until 1 May of the following year.

  • make the following advance payments by the 15th date of each month;
  • the amount of the advance payment is calculated based on the submitted tax declaration for the taxation period before the pre-taxation period (t-2);
  • the amount of the advance payment is one-twelfth of the tax based on the submitted declaration;
  • advance payments are adjusted by the consumer price index of the pre-taxation year;
  • when establishing advance payments some rebates are left out of consideration.

2. Submission of tax declaration for the preceding year

  • payment into the central government budget of the difference between calculated tax amount and the advance payment of the pre-taxation period within 15 days after submission of declaration (if the difference is positive);
  • within 30 days after submission of request receive the difference between calculated and tax paid in the advance of the pre-taxation period (if the difference is negative).

3. After submission of declaration until 31 December of the following year

  • make the following advance payments by the 15th date of each month;
  • the amount of the advance payment is calculated based on the submitted tax declaration for the pre-taxation period (t-1) taking into account all rebates;
  • the advance payment is determined by dividing the difference between calculated payment and the paid tax amount of the pre-taxation period by the remaining number of months;
  • advance payments are adjusted by the consumer price index of the pre-taxation year.
 
Tax collector

State Revenue Service.

 
Special features

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51b

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 356.62 EUR 1.62
2011 283.16 EUR 1.41
2010 174.03 EUR 0.98
2009 290.76 EUR 1.55
2008 726.92 EUR 2.99
2007 572.40 EUR 2.53
2006 366.66 EUR 2.13
2005 260.22 EUR 1.90
2004 195.60 EUR 1.68
2003 151.57 EUR 1.45
2002 198.37 EUR 1.96
2001 175.71 EUR 1.88
2000 131.83 EUR 1.53
1999 138.81 EUR 1.97
1998 138.36 EUR 2.16
1997 119.25 EUR 2.08
1996 81.89 EUR 1.74
1995 68.95 EUR 1.67

Comments