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Latvia: Tax developments in response to COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 30 March 2020

The government of Latvia announced tax relief measures to support businesses in response to the coronavirus (COVID-19) pandemic. The measures include:

  • Postponement of tax overdue for up to three years if the overdue tax arises as a result of the outbreak;
  • Simplification and acceleration of tax refunds for entrepreneurs; and 
  • Foregoing personal income tax advances in 2020.

In general, through 30 June 2020, tax relief allows for:

  • Postponement of current and overdue tax payments for companies in industries "most affected" by COVID-19, for up to three years, or the ability to make instalment payments when the delay is related to COVID-19 without triggering late-payment penalties; a request must be submitted to the tax authority.
  • A quicker process for refunds of input value added tax (VAT); beginning 1 April 2020, the tax authority will refund the approved input VAT within 30 days after the due date of submitting the VAT return (and not until end of the tax year), and the faster refund of input VAT will also apply for January and February 2020.
  • Cancellation of advance payments of individual (personal) income tax for self-employed individuals, and no late-payment fees for failure to remit the advance payments.
  • Postponement of real estate tax payments to be allowed by municipalities.
  • Submissions of financial statements (annual report and consolidated annual report) may be made later than the legal deadline (three or four months, respectively).

Regulations issued March 24, 2020 defined which industries were “most affected” by COVID-19 and include public catering, international passenger transportation, car lease, hospitality and tourism, public and cultural events, education, and fitness services. 

These tax relief measures were extended on March 26, 2020 to all companies—regardless of their industry sector, provided the companies meet certain criteria:

  • Turnover in March or April 2020 compared to the respective month in 2019 decreased by 30% or more.
  • Turnover in March or April 2020 compared to the respective month in 2019 decreased by 20%, if one of the three following requirements is met: 
    • The company’s revenues from export amounted to at least 10% of total turnover in 2019, but not less than EUR 500,000.
    • Average salary paid in 2019 was at least EUR 800.
    • Long-term investments in fixed assets as at 31 December 2019 was at least EUR 500,000.

There are other criteria for a company to qualify for the downtime support, such as compliance with tax return submission rules, payment of outstanding tax liabilities, lack of identified major tax compliance breaches, etc. In assessing taxpayer applications for the postponement of tax payments, the tax authority will assess compliance with prior tax payment and tax return submissions, the level of cooperation from the taxpayer, and if there have been tax assessments raised following previous tax audits.