Starting from January 1, several Finance Ministry’s managed legal regulations in relation to tax policy will come into force. More about taxes, comapny formation and accounting you can find in our webpage register your company in Europe.
Latvian residents will be mostly affected by the changes to PIT rate: starting from January 1, 2013, the standard rate will be 24%, instead of the current 25%. Starting for July 1, 2013, on the other hand, benefits for dependents will be increased from the current 70 to 80 LVL, informs Finance Ministry.
2013 will also introduce new tax avoidance prevention regulations in relation to taxation of income that comes to PIT payers from their participation in low tax and no tax or territorial associations, trusts or other judicial formations.
In order to limit tax planning for enterprises that avoid paying the salary tax and mandatory social insurance payments, when issuing cash or non-cash advance payments, from now on, advance payments in cash or not cash will be considered equal to an employee’s income if tax payments are not submitted for them within 90 days of the advance payment.
Next year’s state or EU support payments for agriculture and rural development will not be included in the yearly income. Starting from December 31, 2014, however, there will be an extension of the period of time when income, received as a result of reduction of credit obligations, can be considered non-taxable.
!!! Starting from 2013, CIT will not be applied to non-residents’ paid and received dividends. This regulation will not apply to dividends that are paid to low-tax or non-tax state residents. There will also be a central CIT regime on income and losses from sales of shares, except sales of tax or non-tax state shares.
January 1, 2013 will also introduce amendments to the Taxes and Duties Law in relation to restrictions of using cash – the cap will be reduced from 3000 LVL to 1000 LVL. After reaching this cap, it will be necessary to declare the cash transactions. Also, tax payers that carry out economic activities will be required to declare all cash transactions carried out in the previous year with private persons that are not required to register their economic activity, unless the amount of one cash transaction does not exceed 2000 LVL.
