COVID-19 in Latvia: FAQs by taxpayers

What kind of state support measures are put into effect in the field of taxation?

In the field of taxation the following support measures are available to taxpayers affected by COVID-19:

• possibility to defer or split into installments accrued and current tax payments for a period up to 3 years, without paying late payment interest. Taxpayers can apply for this measure until 30 June 2021 and it shall be done via EDS within 15 days from the due tax payment term.

In accordance with the Regulation of the Cabinet of Ministers possibility to defer or split delayed tax payments into installments for a period up to 3 years, without paying late payment interest will be available to any company affected by COVID-19, whose turnover from commercial activity during the respective 2020 and 2021 months has decreased by not less than 20% in comparison to the average monthly turnover in August, September and October of 2020, when the undertaking had actually operated.

• municipalities have the right to determine other deadlines for the payment of the immovable property tax in 2020 and 2021, postponing them to a later period within the same taxation year. The late payment charge pursuant to Article 29 paragraph two of the law On Taxes and Duties shall not be calculated for the tax payment for which the municipality has determined another deadline and that has been made within the deadline stipulated by the municipality;
• the tax authority is not obliged to adopt negative decisions in respect of participants of the enhanced cooperation program until year 2023 if the respective participant is affected by the Covid-19 crisis.
• individual economic operators are released from the obligation to make advance PIT payments in year 2021, without paying late payment interest;
• more favourable CIT regime is established in respect to donations and gifts in order to reduce consequences by the spread of Covid-19.

Is it possible for other tax payers to defer the payment of taxes?

Tax payers that do not meet any of the above criteria can ask to defer the payment of outstanding taxes for a time period up to 1 year by splitting payable amount in installments. However, a late payment interest would be applied at the rate of 0.0125% for every day throughout the entire period of delay. Exception to this is extension of payment term due to force majeure circumstances. An emergency situation that was declared in Latvia is not a basis to automatically assume an occurrence of a force majeure situation. An assessment whether the specific situation constitutes force majeure circumstances must be made on a case by case basis.

An application regarding this must be submitted no later than within 15 days after the due payment date. If the delay of the payment is due to a force majeure situation, there is no set time limit for the submission of the application regarding split of payment into installments or deferral of tax payments for 1 year, however, it would be recommended to do it within a reasonable time after the occurrence of the force majeure circumstances. The payment of the taxes resulting from the audit may be divided over the period of up to 5 years. The application must be submitted 3 days before the due payment date. The application form can be found within the EDS (Application for the deferral of the payment of taxes (in Latvian: Iesniegums samaksas termiņa pagarinājuma piešķiršanai).

In respect to the taxes that must be paid to the municipal budgets, a decision is adopted by the relevant municipality. Accordingly, an application regarding such taxes shall be addressed to the relevant municipality.

Please contact COBALT Latvia Partner Sandija Novicka for more specific insight and advice.