Latvia has been pro-active in face of the COVID-19 pandemic and has taken many measures to reduce the negative effects of the resulting ‘downtime’. The state of emergency has been extended until 12 May.
Tax payment extensions
- The government has adopted measures to support businesses and individuals affected by COVID-19 by deferring payment of outstanding taxes for up to three years, as long as the taxpayer has already been granted an extension.
- Taxpayers required to make advance payments of taxes have also been granted a deferral, without incurring late-payment penalties.
Tax return filing deadline extended
- Year-end tax filing for businesses has been extended to 31 July 2020.
Financial support for employees of business experiencing downtime
- Financial measures have been taken to support employees of businesses forced to suspend activities during this downtime. Downtime benefits are available to all businesses registered before 31 December 2019. Certain businesses/taxpayers may not apply for benefits if they have unresolved tax debt issues exceeding 1000 EUR, are in bankruptcy proceedings, or were convicted of serious tax or customs infractions in the last year.
- Any business that has lost at least 30% of revenue in March and April (compared to the same period in 2019) is eligible for support. Businesses with losses of 20% must comply with specific criteria to be eligible for support. Compensation is available from the state budget to pay partial wages for employees of companies working in sectors indicated by the Cabinet of Ministers and forced to shut down during downtime. Recipients of this downtime wage will not be required to pay personal income or mandatory social insurance taxes on this amount.
- To apply for downtime benefits for March, a business must submit a special Downtime Application by 25 April and onwards by the 25th of the following month through the Electronic Declaration System (EDS). The State Revenue Service (SRS) reviews the application within 5 business days and if all criteria are met, funds are immediately deposited into the bank accounts of the employees listed in the application.
- The downtime benefit available is 75% of average monthly gross earnings for six months before the emergency, as determined by data submitted by the employer and employee to SRS, but not more than 700 EUR per calendar month. Downtime salary for micro-enterprises is 50% of average income received in the last half of 2019 but not more than 700 EUR per month. Downtime benefits are available only as long as the state of emergency lasts.
- For employers who have operated fewer than six months, the benefit is calculated from the average gross salary for the months worked before the declaration of a state of emergency.
- SRS will publish the names of those who have received downtime benefits on their website and inform the State Social Insurance Agency and other social agencies on recipients of downtime benefits. This is necessary to prevent ‘double-dipping’ by which one person receives both downtime benefits and crisis benefits offered by municipalities.
Quicker repayment of VAT refunds
- The government has encouraged paying out refunds to businesses by requiring SRS to refund approved VAT amounts to all taxpayers within 30 days of filing a VAT return as well as refunds for confirmed amounts of VAT currently accrued until the end of 2020. VAT overpayments may be revised in 2021.
Permissible tax debt threshold for financial assistance
- The permissible tax debt threshold has also been increased. Companies may apply for tax support measures even if their tax debt does not exceed EUR 1000 on the day of submitting the application.
Other measures
- Excise duty stamps will be delivered in person to businesses using state mandated protective measures.
Organisational issues
- Face-to-face audits have been suspended for the duration of downtime.
SRS services have been increased through communication via EDS and by phone – a dedicated COVID-19 hotline has been created to assist taxpayers. Up-dated information is regularly published in EDS and on social media.
In case you have any document of information which you find worth to share regarding the actions, measures or concrete experiences in countering the crisis, please do not hesitate to upload it to the subpage focusing on Covid-19 Crisis Support on IOTA website in order to share it with other members.