On March 20, 2020 the Parliament of the Republic of Latvia has adopted a law on measures for the prevention and suppression of threat to the state and its consequences due to the spread of COVID-19, hereinafter referred to as “the Law”, including support measures in relation to the Covid-19 pandemic. The Law contains provisions regarding the following support to entrepreneurs in the Republic of Latvia:
1. Allowance for idle time and division of the payment for late tax payments in instalments or deferral thereof for up to three years
Cabinet Regulation No. 165 Regulations regarding the employers affected by the crisis caused by COVID-19 which are eligible for the allowance for idle time and division of the payment for late tax payments in instalments or deferral thereof for up to three years provides that the following employers and taxpayers which have been affected by the crisis are entitled to apply for the allowance for idle time and the division of the payment for late tax payments in instalments or deferral thereof for a period of up to three years:
- whose income from economic activity has, due to the spread of COVID-19, decreased by at least 30 per cent in March or April 2020 in comparison with the respective month in 2019;
- whose income from economic activity has, due to the spread of COVID-19, decreased by at least 20 per cent in March or April 2020 in comparison with the respective month in 2019, and they meet at least one of the following criteria:
- in 2019, the export volume of the employer affected by the crisis amounts to 10 % of the total turnover or is not less than EUR 500 000;
- the average monthly gross work remuneration disbursed by the employer affected by the crisis in 2019 is not less than EUR 800;
- as on December 31, 2019 long-term investments in fixed assets are at least EUR 500 000.
To apply for the allowance for idle time the employer affected by the crisis shall by April 25, 2020 submit to the State Revenue Service the application for the allowance for idle time regarding the time period from March 14, 2020 until March 31, 2020, and thereafter shall submit it by the 25th day of the following month.
To apply for the division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years the employer affected by the crisis shall submit an application to the State Revenue Service through the Electronic Declaration System.
Nevertheless the State Revenue Service shall not grant the allowance for idle time if the employer affected by the crisis has not submitted to the State Revenue Service all tax returns and annual statements for the period of last 12 months before the emergency situation; if the employer affected by the crisis has a tax debt of more than EUR 150 as on March 7, 2020 and an extension of the payment term has not been granted or an agreement on the voluntary payment of taxes has not been concluded; if on the day of taking the decision insolvency proceedings are in effect for the employer affected by the crisis; if the employee has commenced the employment relationships after March 1, 2020 and in other cases specified in the Law.
2.Idleallowanceforself – employed
Cabinet regulations No. 179 provides that self – employed persons are entitled to receive an idle allowance in the amount of 75% of the amount of the State Social Insurance Contribution Object, from which SSICs (up to 700 euros per month) have been paid in the last 2 quarters.
In order to receive an idle allowance, an application to the system of the State Revenue Service is required.
3. Refund of overpaid amount of value added tax
The State Revenue Service within 30 days shall refund the approved and overpaid amount of value added tax which has been indicated in the value added tax return application submitted to the State Revenue Service after 31 March 2020.
4. Annual financial statements
An undertaking to which the Law on the Annual financial statements and consolidated financial statements applies is entitled to submit the annual statement and the consolidated annual statement for 2019 within a term which exceeds the term for submission specified in Section 97, Paragraph one of the Law on the Annual Financial Statements and Consolidated Financial Statements by three months.
5. Prohibition to submit application for insolvency proceedings of legal person
In cases specified by the Law creditors are prohibited until September 1, 2020 from submitting an application for insolvency proceedings of a legal person.
6. Exemption from excise duty of undenatured alcohol which is used in the production of disinfectants
Law provides that the exemption from excise duty shall be applicable to undenatured alcohol which is used in the production of disinfectants containing alcohol if the purchase or production of denatured alcohol is significantly hindered or is not possible due to the spread of COVID-19. In such case the regulatory enactment regarding the procedures by which an exemption from excise duty shall be applied to alcoholic beverages shall be conformed to in the handling of alcohol. A permit of the State Revenue Service for the purchase of alcoholic beverages must be received for the purchase of alcohol.
7. Exemption from excise duty security in the amount of up to 90 per cent
The State Revenue Service may grant a reduction of the general excise duty security in the amount of up to 90 per cent to such merchants which have a special permit (license) for the operation of an approved warehouse keeper and which carry out production of alcohol. Such merchants shall, using the Electronic Declaration System, inform the State Revenue Service of commencement of the production process of alcohol not later than one working day prior to the commencement thereof.
8. Personal income tax
Law provides that personal income tax payer shall not perform the advance payments of personal income tax for the income from economic activity for the taxation year of 2020. This condition shall be applicable to advance payments from January 1, 2020. The payer of personal income tax may perform the advance payments of personal income tax for the income from economic activity for the taxation year of 2020 on a voluntary basis.
9. Exemption of the lease payment
Law provides that state and local government institutions as well as derived public persons and capital companies controlled by a public person, free ports, and special economic areas shall, for the duration of operation of this Law, exempt merchants of the sectors affected by the crisis from lease payment for a public person property and a property of a capital company controlled by a public person or decide on reduction of the lease payment and on the use of the public person property, and also shall not apply late interest and contractual penalties in case of a late payment, except for the money for the services consumed – electricity, thermal energy, water supply, and other services related to the maintenance of the property.
10. Determination of immovable property tax payments
Law provides that local governments have the right to determine other terms for the payment of the immovable property tax in 2020 which are different from the terms determined in the law On immovable property tax, postponing them to a later period within the scope of 2020.