The Republic of Latvia Cabinet of Ministers Regulations No. 319 of 2000 in Riga on 19 September (pr. No 44, § 3.) the law "On enterprise income tax" rules rules Issued in accordance with the law "on enterprise income tax" article 27 1. these provisions define the law "on enterprise income tax" (hereinafter the law) rules laid down for the application of the relevant taxpayers in specific cases.
2. for the purposes of article 1 of the law of the third subparagraph of paragraph 1, the law "on the annual accounts of companies ' mother and daughter company.
3. the degree of Kinship and affinity in law is determined in accordance with the first paragraph of Section "family law", chapter III (kinship and affinity).
4. for the purposes of article 2 of the law, first paragraph, point 3, of the law "on foreign investments in the Republic of Latvia" article 2, fourth paragraph, and the law "About taxes and duties" of article 14.
5. in determining whether a foreign company's permanent representation in Latvia is tax deductible, in addition to the provisions referred to in paragraph 4 of the law comply with the existing bilateral international treaties for avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital (hereinafter the Tax Convention).
6. If a tax Convention, the maximum rate is lower than the rates set out in law or have certain exemptions from taxation, the provisions of the Convention shall be applied in accordance with the Cabinet of Ministers of 19 March 1996, the Regulation No. 66 "rules for the application of tax incentives payments that are paid by non-residents", the taxpayer shall submit to the resident's licence-application.
7. Article 2 of the Act, the fourth subparagraph shall apply in accordance with the law "on the annual accounts of undertakings ' in article 1, second subparagraph. Farmers and fisherman's farmstead and individual company whose revenues from financial transactions in the year pirmstaksācij exceeds the 45000 lat, register as a corporate tax bill and pay the tax for at least five years, including this year when it registered (logged) on corporate income tax, regardless of income. If the final year of the farmer or fisherman's farm or individual company annual revenue from economic transactions are less about 45000 dollars, next year this company can register (optional) as the individual income tax payer or to keep corporate tax payer status.
8. Article 3 of the law of the third subparagraph may be applied only if the foreign company is a subsidiary of the company or permanent establishment (determined in accordance with the law "About taxes and duties" of the sixth article 14 and the relevant tax Convention in force provisions), whether the operation of a non-resident in Latvia are treated as its permanent establishment in accordance with the relevant provisions of the Tax Convention.
Example.
Foreign company (non-resident) use the natural person-resident of Latvia-Latvia for its sales agents. That person is empowered to enter into contracts on behalf of a foreign company, which it regularly uses. So the foreign company has permanent representation in Latvia. Permanent representation in annual profit is LVL 100000, IIT-80000 dollars, tax, applying a 25 percent rate-20000 dollars. Foreign company directly (not through the permanent representation) is sold to consumers in a total of 800000 Latvia lat the same goods which are sold through the permanent representation of Latvia. So the permanent representation in that income liable to corporate income tax, 80000 + 800000 LVL lat = lat 880000. In this case the tax is 220000 lats. Note that in practice, including permanent representation in the non-resident's taxable income earned income directly (example-800000), must report expenses related to be included in income.
9. Article 3 of the law referred to in the fourth paragraph of the payments at specified rates tax payable by non-residents, but only the withholding tax and resident contributions budget. Tax withholding and contributions to the budget of those companies also, companies, partnerships, institutions and organisations, which are not corporate income tax payer or use the facilities in accordance with the law "on foreign investments in the Republic of Latvia", or Baltimore, the special economic zone law, or of Rezekne special economic zone law. Article 3 of the law of the fourth subparagraph shall apply where the non-resident receives revenue in Latvia, not through the permanent representation of Latvia. Depending on whether or not the non-resident has a permanent establishment in Latvia, the same charges can be taxing in different ways.
Examples.
1. the BELC is a company, (B) a resident of the State. It provides consulting and management services company, which is the LATC resident. Advice is provided to the country B which regularly arrives at the LATC. The pay of BELC LATC services 100000 dollars a year. In this case the BELC not permanent representation in Latvia, but the received payment for BELC services taxed in Latvia after 10 interest rate in accordance with article 3 of the law of 2 of the fourth part.
2. the BELC is a company, (B) a resident of the State. It provides consulting and management services company, which is the LATC resident. Advice is provided in Latvia that regularly attend the BELC specialists who teach the LATC in leading employees. The pay of BELC LATC services 100000 dollars a year. In this case, the actions of BELC analyzes the law "About taxes and duties" the sixth part of article 14, which stipulates that if the non-resident provides services including consultancy, management and technical services through foreign company's employees or associated personnel ", believes that the non-resident (example-BELC) has permanent representation in Latvia. In this case, the representation of taxable income shall be determined in accordance with the law "On enterprise income tax" and the Cabinet of Ministers of 18 April 1995 the Regulation No 106 "rules on the permanent representation of the non-resident taxable income" and applies a 25 percent rate.
10. Article 3 of the law referred to in the fourth paragraph, the resident or permanent representation to the non-resident is deemed non-residents of Latvia in revenue regardless of the place of payment.
11. in applying article 3 of the law of the fourth part, the objects of copyright and related rights and shall be fixed in accordance with the Copyright Act, as well as comply with the existing provisions of the Tax Convention. Depending on whether the non-resident has a permanent establishment in Latvia or its not, non-resident tax is determined in accordance with article 3 of the law, the second and third or fourth part of article 3.
12. in applying article 3 of the law of the fourth part, paragraph 4 on the computer programs are exempt royalties pursuant to the fourth paragraph of article 3, paragraph 4 of the section "b" (applying the five interest rate).
13. Persons who committed payments are subject to tax in accordance with article 3 of the law on the eighth, determined in accordance with the Cabinet of Ministers of 31 March 1995, regulations No 69 "rules on duty-free or low taxation countries and areas".
14. Article 3 of the law on the application of the eighth part, the term "charges" means any payments that reduce the taxpayer's taxable income. The concept of "payment" includes interest, royalties, fees for services, payments to reimburse actual expenditure, payment of insurance premiums, cash and a guarantee deposit, which the residents or non – residents of Latvia for permanent representation in Latvia is paid to any person who is, has been created or established duty-free or low-tax State or territory. These payments may be made with the Cashless settlement, to be paid in cash or otherwise (in kind), as well as making a settlement between clearing the way.
15. If the Latvian tax payer shall repay the loan and interest on loans received from a person who is, has been created or established duty-free or low-tax country or territory, the tax is to be deducted only from the interest amount payable.
16. If credit institutions established in the Republic of Latvia of issued loans to a person who is, has been created or established duty-free or low-tax country or territory, that institution, in calculating its taxable income, is not entitled to apply article 7 of the Act in respect of a loan that was issued for that person.
17. If the person who is, has been created or established duty-free or low-tax country or territory, has the bank account registered in the Republic of Latvia in the credit institution and the person concerned from that account, making payments, which the recipient is a person who is, has been created or established duty-free or low-tax State or territory, and this payment is reduced as a result of the Latvian taxpayer's taxable income, is considered that these payments are made to the Latvian taxpayer and as regards the applicable law, article 3 of the eighth part.

18. If the Latvian taxpayer payments to individuals who are, or have been created established duty-free or low-tax country or territory are not exempt from the withholding tax in accordance with article 3 of the law on the eighth, but the Latvian taxpayer considers that as regards these charges are applicable to the persons referred to in article 3 of the law of the ninth part, taxpayers in the State revenue service territorial institution after its registration site before submitting payment-request not to apply article 3 of the law of the eighth for his payments.
19. paragraph 18 of these rules in the application-request the taxpayer shall indicate the nature of the transaction, and the applicable prices, explain what circumstances have established the need to carry out a transaction with a person in one of these countries or territories, certify that the transaction does not take place in Latvia to reduce the taxpayer's taxable income or to pay taxes, and that Latvia Latvian taxpayer or a taxpayer's related persons or companies are not directly or indirectly participated in person: payment recipient , documentary identifies people who directly or indirectly (through participation in another person, the more other people or other way) is the person receiving the payment the actual owners, as well as submit any other information relevant to the State revenue service makes a decision. If the State revenue service requires that a taxpayer after the transaction, submit documents (for example, contracts, customs declaration, Bill of lading) or copies, confirming the actual execution of the transaction.
20. The taxpayer, in applying article 3 of law eighth payments which do not comply with article 3 of the eighth part 1., 2., and 3. the payments referred to in paragraph 1 may not withhold tax by applying the 25% rate, only after the State revenue service a written authorization not to withhold tax from payments specified in the permit or authorisation from payments for these transactions.
21. The State revenue service examined this provision in paragraph 18 above, the application-request and not later than 30 days from the date of receipt issued by the taxpayer written permission does not withhold tax or refusal to issue a licence referred to.
22. the issue of the rules referred to in paragraph 21, the State revenue service it indicates on which payments are subject to authorisation issued by, and the period of validity of the authorization. Latvia State revenue service taxpayer must not issue a general authorisation, applicable in respect of all taxable payments to be performed without specifying a particular transactions and their members (the payee).
23. in applying article 3 of the law of the ninth part, State revenue service, determining whether this payment referred to in subparagraph are not taken to reduce the taxpayer's taxable income and paid or reduce the taxes payable in Latvia, take note: 23.1. or make payments based on real economic activities;
23.2. or the taxpayer need to build economic relations with people who are, have been, or been tax-free or low tax countries or territories, resulting from his business to specifics;
23.3. or by payment of the taxpayer's taxable income is not reduced at higher than if the recipient of the payment would be the Latvian tax payer-resident or non-resident permanent representation of Latvia;
23.4. or the taxpayer, related entities or companies are not direct or indirect accomplice of a person who is, has been created or established duty-free or low-tax State or territory;
14.6. the Latvian tax payer and the person is located, has been created or established duty-free or low-tax country or territory is not considered linked enterprises. Article 1 of the law of the third subparagraph of paragraph 5;
14.7. other factual circumstances under which the relevant transaction takes place, or conditions that affect them, and on the basis of which the decision may be taken not to withhold tax in accordance with article 3 of the law on the ninth.
24. The State revenue service may not without justification refuse the taxable person to issue a permission to not withhold tax in accordance with article 3 of the law of the ninth part, if the taxable person has established that article 3 of the law of the ninth part requirements and the requirements of this regulation which is necessary to get this permission.
Examples.
1. The State revenue service may allow not to withhold tax from the Latvian international maritime and air transport companies in port and airport fee payments, as well as from payments for ships or aircraft maintenance and supply or emergency repair (also from payments for the purchase of materials and equipment for carrying out such a repair); payments for aģentēšan, insurance, shipping management, communication services, advisory and legal services that these companies of Latvia paid tax-free or low tax countries or territories company where Latvian companies in international traffic uses the duty-free or low-tax countries or territories port or airport or in those countries or territories do the necessary repairs.
2. Duty-free or low-duty to residents of a country or territory is open a bank account in Latvia. On the account balance, the bank paid (plus) percent of Latvia's residents, including payments to the account and the account holder of account payments (including payments where recipients are persons who are, or have been created established duty-free or low-tax countries or territories). In determining whether a should be withheld from the interest tax, the bank complied with this provision the requirements of paragraph 8, while Latvian resident withholding tax from the payments it including duty-free or low-tax State or territory resident account in a bank in Latvia. From payments by the account holder, tax withheld, if these payments directly or indirectly reduces the taxpayer's taxable income.
25. If the State revenue service, the application of article 3 of the law of the ninth part, revoke the authorisation does not withhold tax at the payment of the tax arrears of the principal sum and the delay of money is calculated from the date on which payment is made, from which was to be deducted tax.
26. A taxpayer may request the opinion of the Evaluation Committee of transactions according to the law "About taxes and fees" for article 39 if there is disagreement with the State revenue service on the market price of the transaction or market value assessment, carried out by the person who is, has been created or established in one of the free or low-tax countries or territories.
27. Article 4 of the law in the first paragraph, provides that, in determining the taxable income of the taxpayer, the amount of profit is increased or reduced by the amount of losses it spending (or part of) an amount that is not directly related to the taxpayer's business operations, and the amount of losses that resulted in the taxpayer-owned social infrastructure maintenance. These expenses (loss) must be contained in the respective taxable profit and loss account items of expenditure.
28. Public organizations, which according to the law "on public organizations and their associations" is a non-profit organisation, not applicable law article 4, part 1.1, if they comply with the law "about the nonprofit organizations ' requirements. This public organization submitted a corporate income tax return.
29. in determining the taxable income of the permanent missions, in accordance with article 4 of the law the second part of the law, the Cabinet of Ministers of 18 April 1995, Regulation No 106 "rules on the permanent representation of the non-resident taxable income" and the Cabinet of Ministers of 31 March 1995, Regulation No 69 "rules on duty-free or low taxation countries and areas".
30. the main characteristics of permanent representation is that permanent representation is non-residents (foreign company) and not a separate company. In determining the taxable income of the permanent representation are not taken into account in the income and expenditure incurred in carrying out various duties (deployment of income or expenditure) between different non-residents (foreign company) components, that is, between the foreign company's permanent representation of Latvia and the rest of the company (excluding foreign companies-banks-permanent representation of Latvia).

31. the Permanent Mission may cover certain non-residents (foreign company) expenses to the extent they are applicable to the non-resident's permanent representation of Latvia (used for permanent representation in the business). In determining the taxable income of the permanent representation are allowed to cut down on certain foreign business (non-resident) total expenditure if the expenditure concerned is linked to a permanent representation in Latvia in the business. The permanent representation of the part of the related expenditure is determined in proportion to the permanent missions of the revenue ratio of foreign business (non-resident) (see total revenue. The Cabinet of Ministers of 18 April 1995, Regulation No 106 "rules on the permanent representation of the non-resident taxable income"). The reductions are not allowed when determining the Cabinet approved duty free and low taxation countries (see the list. The Cabinet of Ministers of 31 March 1995, Regulation No 69 "rules on duty-free or low taxation countries and areas") that residents of countries and territories for the permanent representation of the taxable income. The Cabinet of Ministers of 18 April 1995, Regulation No 106 of the "rules for the permanent representation of the non-resident taxable income" is not obliged to allow to apply the reductions referred to in any case. It may be permitted if the taxpayer proves that the expenditure concerned is really related to the business carried out in Latvia and earned income.
32. If you allow to reduce taxable income, the amount of the reduction shall be deemed payments to non-residents and withholding tax accordingly from it in accordance with the law "On enterprise income tax" (see. The Cabinet of Ministers of 18 April 1995 No. 106 of the provisions of the "rules for the permanent representation of the non-resident taxable income" 5, 6, 7 and 8).
33. the permanent representation in non-residents taxable income shall be determined pursuant to the Cabinet of Ministers of 18 April 1995 No. 106 of the provisions of the "rules for the permanent representation of the non-resident taxable income" in paragraph 2. If the non-resident supplies (pass), the permanent representation of the goods for resale in Latvia, this application allows you to reduce the taxable income of the permanent representation of the amount paid for the goods supplied in a separate company that operates independently of the non-resident purchases goods and on market prices. (On market pricing, see paragraph 62 of these regulations.)
Example.
SWEC is a State resident, then Z is a permanent representation in Latvia. SWEC supplied permanent representation for television sets, including their purchase price-180 lats for each. The mission implement them for 200 lats each. Permanent establishment shall submit a tax calculation, in which the taxable income is set 200 lats-LVL 180 = 20 lats, of which tax is five dollars. The State revenue service has information that the same tv, independent wholesalers distributes about 140 lats each. Based on this information, the State revenue service adjusts tax calculation and submitted on expenditure recognised only 140 dollars. Thus, taxable income is 200 lats-LVL = 140 60 lats and tax-15 Lats.
34. in applying article 5 of the law, the first paragraph, the taxpayer accounting shall show all expenditure, including those which are related to the business. If the company receives a gift purchased on the company's products, the gift's value increases the employee's taxable income is deducted from personal income tax and compulsory social insurance contributions, as well as the payment of the employer's State social security payment to the employer. The company's taxable income is increased by the value of the gift which is less than the Cabinet's 31 March 1998 regulations No. 112 "rules on income subject to the payroll tax paid" the gift of the employer and not added to the employee's pay as additional income. If this is not done, the taxpayer can apply sanctions for concealing taxable income. To expenditure which is not related to a taxpayer's business operations, plus business owner and employee entertainment and benefit expenses that cannot be distributed to the staff.
35. The minimum cost of staff in accordance with the laws or the terms of the Cabinet is operating expense item, and they can not be considered as an expense that is not related to the taxpayer's economic activity.
36. The taxable income will not increase for the amount of expenditure which is paid by the employer to ensure that the law "on labour protection" laid down in article 23 duties, as well as the expenses for preventive health measures in sectors where working conditions require it (for example, vaccination against tick expenditure encephalitis in the forest or employed for vaccination against infectious diseases the pharmaceutical and health care personnel).
37. in applying article 5 of the law third, taxpayer-owned housing and communal holding objects, as well as education, culture, sports, catering and medical care institutions are considered social infrastructure objects, if that object or use the services provided by the authorities are the businesses that are not registered in the company register as taxable business activity.
38. The application of article 5 of the law of the fourth part of the taxpayer to his taxable income should not be reduced by this paragraph the amounts specified, and any other sum whose payment is not commercially linked with the company's business operations. Checking the taxpayer's taxable income, the State revenue service determines whether the expenditure is related to the company's business operations, as well as assess the essence and basis of payment.
39. The company's operating expenses, which do not apply article 5 of the law of the fourth part, considered the company's advertising expenditure on the winnings or prizes that you win, drawn and donated by the company in arranging promotional competitions, the results of which are reflected in the mass media, or by providing awards to other business organize competitions, if this contest venue the company advertising, contests are organized to expand his production (services) markets and membership in these competitions is not otherwise limited, as only providing that the participant must buy the item in question or answer a question. Article 5 of the law of the fourth part of the rule applicable if advertising campaign uses the prize money, which the recipient undertaking cannot be identified (for example, the banknotes are goods in packaging), as well as to the law "on personal income tax" cases may not withhold individual income tax.
40. in applying the law of article 6, first paragraph, point 1, the company's financial accounting in asset and accounting of intangible investments, depreciation and write-offs that reflect the fixed assets and intangible investments in physical, moral or other kind of value the real loss and shows the company's true profit or loss. Any fixed asset company in its financial accounting, you can use a different method of depreciation accounting, however, change this method for an individual asset cannot be otherwise, as specified in the law on accounting.
41. fixed asset depreciation and intangible investment write-off procedure laid down in article 13 of the law, only for tax calculations. The company's financial accounting of fixed assets depreciation rate or rates may not be the same as laid down in article 13 of the law.
42. Since the company's financial earnings statement as one of the items of expenditure is included in the actual fixed asset depreciation, as well as in accordance with the law "On the annual accounts of companies ' publications subscribed intangible investments, taxable income is increased by the amounts concerned and be reduced by an amount calculated in accordance with article 13 of the law.
43. in applying article 6 of the law, the first subparagraph of paragraph 2, the taxable income is increased by the amount of the fine, which is reflected in the taxpayer's profit and loss statement. This provision shall also apply to the amount of the penalty, calculated and paid in accordance with the law on taxes and duties ", the law" on personal income tax "and the law" on State social insurance ".

44. If the taxpayer-the company whose share capital or municipality of the country part is greater than 50 percent, as well as financed from the budget of the institution or of the iztrūkumo izlaupījumo of loss is noted down in its financial accounting, according to article 6, first paragraph, point 3 of the tax year taxable income increases by this amount. The taxable person must take all possible measures to recover the lost iztrūkumo and izlaupījumo values: the underlying should immediately notify the authorities of the investigation and criminal prosecution or formal refusal to propose. If after such measures in future tax years concerned the loss amounts are recovered, then, in determining taxable income, the profit will be reduced by the sums recovered.
45. The application of the law, the first paragraph of article 6, paragraph 4, of the company's taxable income is increased by the sum of the costs mentioned, only if the company of the non-resident is not after a tax in the amount set in accordance with article 24 of the Act. Tax on the amount by applying a tax rate of 25 percent must be paid even if the company is exempt from corporate income tax payment or 100% use incentives in accordance with the law "on foreign investments in the Republic of Latvia".
46. Article 6 of the law on the third part of the said loan interest payments (regardless of the loan repayment period) is one of the items of expenditure the financial accounting. Determining taxable income, corporate profits increased only on the interest payment the amount of which is included in the cost of long-term investments in accordance with the law "on the annual accounts of undertakings" 26.
47. Article 6 of the law of the fourth part in State and local levies tax financial accounting is shown as cost items. The law does not determine the taxable income adjustments on these amounts.
48. in applying article 6 of the law of the fourth part, taxable income reduced by subsidies received by taxpayers, which produces agricultural products or agricultural primary law article 1, paragraph 4, and which paid as State aid for agriculture, as well as the subsidies that are paid as European Union aid for agriculture and rural development.
49. Article 6 of the law on the fifth part provides that the calculation of the tax, not be taken into account in the balance sheet items revaluation of assets. Gains and losses resulting from foreign currency rate changes, are taken into account and credited to the taxpayer's total profit or loss in accordance with the relevant booking operations accounts.
50. in applying article 6 part this part 5.1 the first sentence applies to all taxpayers, which the profit and loss statement showing the company's interests in values increases or reductions of subsidiaries (related) equity. If the taxpayer of that part of the increase in the value of the participation and the difference between the calculated dividends have not been pēctaksācij during the absence of the reserve in accordance with the law "on the annual accounts of companies" article 39, pēctaksācij taxable income of the period of increase of revenue from shares in subsidiaries or associated companies, which are non-resident or who apply the law "on foreign investments in the Republic of Latvia" in certain corporate income tax incentives or Baltimore, the special economic zone law or Rezekne special economic zone Act tax rebates.
51. Article 6 of the law, sixth paragraph, applicable to any type of insurance payment of insurance premiums, pursuant to article 6 of the law in the seventh part of these conditions.
52. Article 6 of the law in the seventh part of the provision contained in article 6 of the sixth is the special nature of the rules of law. Employees ' life, health and accident insurance premiums and private pension funds under the licensed pension plans of the employer contributions made to the exclusion from income that is taxable under article 6 of the seventh part 1, 2, 3 and 4, is intended to limit.
53. in accordance with article 6 of the law of the sixth and seventh paragraph, subject to the limits laid down in the law of the company's taxable income may be excluded according to the law "on insurance contract" made any type of insurance the insurance premium payments to insurance companies that are established and operate in accordance with the insurance company and under the supervision of the law. Article 6 of the law in the seventh part of the restrictions apply also to insurance premiums that payments are made on the basis of the insurance contract, concluded before 1 January 2000.
54. in determining the taxable income, this should be an increase of employee life, health and accident insurance premiums and private pension funds under the licensed pension plans, the amount of which does not comply with the law, article 6 of the seventh part 1, 2, and 3. the criteria set out in paragraph 1, as well as on the measures taken during the tax period all payments referred to in this paragraph, if the employer has a tax liability of the previous corporate income tax for the tax period under article 6 of the seventh part of paragraph 4.
55. If the taxpayer has entered into its employee life insurance contracts with mobilized funds for five years or for a period longer than five years, or the life, health or accident insurance contract without the accumulation of funds for one year or for a period that is longer than one year, but breaking this agreement before the deadline, the relevant taxation period, in the taxpayer's taxable income must be increased by the sum of all premiums What is the cost of this contract.
56. If by the end of the period of insurance the taxpayer fails to pay the insurer all insurance premiums, but only part of it, all the paid insurance premiums included in taxable income the portion of the taxation period in which the duration of insurance expires. If an insurance contract is concluded is expired, but insurance is timed and the taxpayer gets back part of insurance premiums (bonuses), back the received insurance premiums must be included in the taxpayer's taxable income in the relevant tax period.
57. in applying article 7 of the law, with no debts probably understands its obligations to the credit institution debt incurred in acquiring credit institution the claim (debt) securities, and in accordance with the rules laid down by the Bank, you have to create special provisions. Article 7 of the Act shall not apply to special reserve created in shares and other securities with fixed income or related to participation in share capital of subsidiary, own shares to cover losses in case of theft and fixed assets.
58. The application of article 9 of the Act, a taxpayer's financial earnings added to forfeited amount of debt, which is listed as a tax expenditure items, except for the lost amount of debt that can be subject to all the conditions referred to in this article.
59. Article 10 of the law on the application of the fourth part explains the following example: if lost, the carrying amount of fixed assets in financial accounting is 300 dollars, the amount of the compensation, but the newly purchased 250 lats-asset value-350 dollars, the new asset book value, to be used in the calculation of depreciation in accordance with article 13 of the law (so the value that will be added to the value of the category in question) is 400 lats (300 + (350-250) = 400). The financial accounting of such operations does not reflect.
60. If the company is paying dividends-application of other statutory corporate tax reductions or exemptions, are completely or partially exempt from corporate income tax, in accordance with article 11 of the law company-recipient of dividends included in its taxable income the portion of dividends receivable in proportion to the share of profits that have not been subject to the corporate income tax. With other laws understand those rules that a domestic company-resident gives the right to tax discounts or incentives, but not on the general corporate income tax, calculation and payment principles (Liepaja special economic zone law and Rezekne special economic zone Act). If the corporate income tax reductions or exemptions are introduced with yet another law that the application of the proportional reduction in the budget of the securities to corporate income tax in the amount of business that uses the following statutory corporate income tax reductions or exemptions, dividends received will be taxed in proportion to the benefit received, or discounts.

61. The mother's (related) companies under article 11 of the law included in your income in the taxable portion of the dividends receivable that has not been subject to corporate income tax, where, in accordance with the law "on the annual accounts of the parent article 39" (linked) in the profit and loss account is shown in its subsidiaries (related) companies for profit, which is non-resident, or apply the law "on foreign investments in the Republic of Latvia" in certain corporate income tax incentives or Baltimore, the special economic zone law or Rezekne special economic zone Act company income tax rebates, and if that part of the increase in the value of the participation and the difference between the calculated the dividend is credited to a reserve in accordance with article 6 of the law 5.1.
62. in order to determine the law article 12 of part two, 2, 3, and 4. the goods referred to in paragraph (products, services) market price or value of the transaction, the transaction may apply to the Commission for evaluation (see. The Cabinet of Ministers of 28 March 1995 No. 67 of the rules "rules for the assessment of transactions Commission") or apply the following methods: 62.1. the comparable uncontrolled price method-prices are applied to the company and its associated companies (Permanent Representative) transactions are compared: 62.1.1. with the transfer prices (that company and with it related company like bargain prices);
62.1.2. with external prices (another unrelated businesses like bargain prices, as well as model or values, for example, customs value);
62.2. resale price method-method based on the price at which the goods (products) that were acquired from a related company, is sold on to independent customers. That price shall be reduced by the amount of the seller's expenses related to goods (products) sales to independent customers, and profit. The remaining amount is to be regarded as the price applicable to transactions between independent companies (market price) and comparable with the price actually charged transactions between related companies;
38.7. subtracting the cost method-method based on production (services) the supplier's cost of production (services) delivery to the related company. These costs plus the appropriate profit margin and obtains the price would apply, if the deal were to happen between two unrelated companies. The appropriate profit margin shall be determined on the basis of the profit margin which the same production (services) the supplier receives transactions with unrelated companies. Can be based also on the profit margin, any other company in similar transactions with unrelated companies.
63. If this rule 62.1. the prices referred to are different, then determining the goods (products, services) in value, the price of which would be applied to transactions between unrelated companies. Determining taxable income, appropriate adjustments shall be made. If similar transactions are not big differences in prices can be compared, if possible not to take into account the factors that affect business differences have arisen.
64. the company's profit is not to be adjusted, if the enterprise-resident of Latvia (permanent representation of a non-resident)-sold to foreign company or associated company that is exempt from corporate income tax, or the company that used the law "on foreign investments in the Republic of Latvia" benefits or Baltimore, the special economic zone law or Rezekne special economic zones for discounts, or if permanent representation shall transmit to the rest of the company, located in foreign countries goods (products, services) at prices that are higher than the market price, or the purchase of goods (products, services) at prices lower than the market price.
65. Article 12 of the Act, the fourth subparagraph shall apply in accordance with the Cabinet of Ministers of 31 March 1995, regulations No 69 "rules on duty-free or low taxation countries and areas".
66. In application of article 13 of the law, the first paragraph, note that it applies only to the commercial activity of the fixed assets. If the fixed asset is not used in economic activities, it must not include any of the substances referred to in paragraph 1 the asset categories, so it is not included in the calculation of depreciation in accordance with this article. When a fixed asset is used in economic activities, but then someone in the tax period off (for example, scrapped, sold, given away with the purchase of the lease), then the category of the asset's annual depreciation is calculated in article 13, first paragraph, the procedure laid down in paragraph 4, but reduced by the taxpayer's financial accounting the fixed assets reported off the residual value and the natural disasters or forcibly lost the residual value of the fixed asset.
67. Article 13 of the law in the first part of paragraph 2 shall only be carried out by the accounts specified in fixed asset depreciation calculations in accordance with that article. The law does not set fixed asset accounting financial accounting.
68. fixed asset depreciation in accordance with article 13 of the law the first parts 1, 2, 3 and 4, the following clear examples: tax period the unit's book value at the beginning of the tax period or purchase value of fixed assets created capital costs Off fixed assets net book value net book value, from the taxation period depreciation (3. + 4. + 5.-6.)
Rate (double) taxation period depreciation (7.8 x)
Residual value after depreciation deduction of the tax period (beginning the next tax period (7-9).
1 2 3 4 5 6 7 8 9 10 1995 $5380 2490 460 3520 4810 40% 1924 2886 PCs.
2886 x $25 13 18 20 20 1996.
20 note. In this and the following points in the specified table is just an example, not an approved form of calculation or fixed asset accounts.
The entries in the table are obtained as follows: 68.1. box 3 for 1995 in accordance with the law, the transitional provisions of paragraph 4, the amount of the category of fixed assets balance balance value of January 1, 1995. For subsequent periods of taxation records are taken from the records of the box 10 pirmstaksācij period;
68.2.4. column sums all the category of asset acquisition or creation (the value at which the asset is placed in service) values that the relevant taxation period has purchased or put into service and used in economic activities. These data are taken from the financial accounting;
68.3.5. box of all tax period the amount of capital costs that apply to specific categories of fixed assets. These data are taken from the financial accounting;
68.4.6. column sums all turned off during the tax period and the disaster or the forced loss of residual value of fixed assets the taxpayer the financial accounting of fixed assets off day;
7. record 68.5. aisle is obtained using the following formula: 3. + 4. Aile + 5.-6. box;
68.6.9. column entry is obtained using the following formula: 7. box x box 8;
68.7.10. aisle record is obtained using the following formula: 7. box-box 9.
69. Article 13 of the law of the first subparagraph of paragraph 5, the following clear examples: tax period the unit's book value at the beginning of the tax period or purchase value of fixed assets created capital costs Off fixed assets net book value net book value, from the taxation period depreciation (3. + 4. + 5.-6.)
Rate (double) taxation period depreciation (7.8 x)
Residual value after depreciation deduction of the tax period (beginning the next tax period (7-9).
1 2 3 4 5 6 7 8 9 10 1995 Ls-1090-5380 460 6930-0 PCs.
25 19 6 6 1996 Ls 0 PCs.
6 in this case about 1090 lats increase taxable income (without entering the financial accounting), but the category balance sheet (net book value, after deducting annual depreciation in money terms) equates to zero.
70. Article 13 of the law in the first part of paragraph 6, the following clear examples: 70.1. Tax period the unit's book value at the beginning of the tax period or purchase value of fixed assets created capital costs Off fixed assets net book value net book value, from the taxation period depreciation (3. + 4. + 5.-6.)
Rate (double) taxation period depreciation (7.8 x)
Residual value after depreciation deduction of the tax period (beginning the next tax period (7-9).
Ls% 1 2 3 4 5 6 7 8 9 10 1995 5380 2490 460 8255 75 40 30 45 PCs.
25 13 18 20 20 1996 Ls 0 PCs.
20 If the relevant categories of fixed assets net book value after deduction of depreciation at the end of the tax period does not exceed 50 pounds, respectively (in this case about 45 lats) reduces the taxable income (without entering the financial accounting), but the remaining value in terms of money coming in at the beginning of the tax period equates to zero;
70.2. The tax period the unit's book value at the beginning of the tax period or purchase value of fixed assets created capital costs Off fixed assets net book value net book value, from the taxation period depreciation (3. + 4. + 5.-6.)
Rate (double) taxation period depreciation (7.8 x)

Residual value after depreciation deduction of the tax period (beginning the next tax period (7-9).
1 2 3 4 5 6 7 8 9 10 1995 $5380 3490 460 8300 1030 40% 412 618 PCs.
$25 13 38 0 0 1996 0 PCs.
0 If the end of the tax period in a given category does not have any asset, the taxable income reduced by 618 lats (without entering the financial accounting), the remaining value in monetary terms the next taxation period equates to zero and any records in the appropriate category of fixed assets starts from the beginning.
71. If, for each category of fixed asset depreciation calculation is performed in accordance with these rules, 69 and 70 68. examples in point, fixed asset tax period the total amount of the depreciation, which reduces taxable income under article 6, first paragraph, point 1, the result of adding table 9 the amounts mentioned in box for all categories and adding depreciation of intangible investment in accordance with article 13 of the law.
72. in accordance with article 13 of the law, first paragraph, point 8 land, works of art, antiques, jewelry and other assets that are not subject to physical or moral depreciation (such as Museum or assets, which they equate to), no depreciation is calculated.
73. Article 13 of the law referred to in the second subparagraph of the capital costs for buildings and structures comply with Latvian et seq (LBN). As regards the technological equipment and machines take into account substantial machinery or equipment parts, such as engine or Powertrain replacement. For kapitālaj costs are considered the cost of career, Marsh and other mineral deposits in the preparation of (atcelmošan, ditch excavation, installation, the surface of Earth nostumšan). The capital cost incurred in preparing for career and other mineral deposits, is attributable to buildings.
74. in accordance with article 13 of the law third, depreciate assets, net book value before taxation period depreciation may be multiply by the factor (average rate), for a financial accounting is increased or decreased value of fixed assets in the category concerned in the case of privatization or the relevant Cabinet of Ministers regulations on asset revaluation in the case provided.
75. In application of article 13 of the law, the fourth part of the intangible investment costs of setting up depreciation in accordance with article 6 of the law in the first part of paragraph 1 is one of the components of the depreciation deducted in the calculation only concessions, patents, licenses and trademarks.
76. The taxpayer's financial accounting account "concessions, patents, licences, trade marks" may be to list only the rights acquired for consideration. All these rights confirmed by the document confirming this right received for payment. For the same company in the research work received patents and licenses in that account to list may not, as their building costs have already listed the research costs. Such concessions, patents, licenses and trademarks are not intangible assets.
77. On intangible investment costs to obtain a concession considered Latvian laws allowed payments directly related to the acquisition of concessions. If the concession rights acquisition for the concessionaire undertakes to transfer to the State share of future profits, the profit tax law meaning not considered intangible investment costs to obtain concessions.
78. If the concession is granted for a period of less than ten years, but patents, licenses or trademarks-for a period shorter than five years, the value of the scrapped term (during the tax period) to which the concession is issued, patent, license or trade mark.
79. In application of article 13 of the law the seventh paragraph, the renter must not include the value of the fixed asset depreciation calculations.
80. Article 14 of the law on the meaning of the third paragraph of the company's core business before the change of control is the activity with the largest share of the total turnover of the taxpayer under the taxpayer's specified in the statutes, activities, on the basis of the NACE classification (General classification of economic activities) classes. If the two-year period before the change of control, have been different types of operating activities, then it is considered the key activity, which had the highest average proportion. If one of the five following change of control periods to control Exchange while fixed operating way is no longer a core business (its share in total turnover is down), the company loses the right to cover the losses.
81. Losing the right to cover the losses, the company clarified the previous taxation period (starting with the tax period in which the change of control occurred) taxable income, increased by the amount of losses carried forward, which built up before the tax period, when a change of control, and cover during the tax period in which the change of control, and in subsequent taxation periods. An increase in the amount of the tax from the tax period taxable income the increase considered overdue tax payment for which the principal sum is calculated magnification and delay money according to the law "About taxes and duties".
82. in applying article 15 of the law, the first paragraph, the tax credit in accordance with the law "on foreign investments in the Republic of Latvia", or Baltimore, the special economic zone law, or of Rezekne special economic zone law to be applied to the amount of the tax by the law "On enterprise income tax" 16 and article 20 establishes the discount applies.
83. in applying article 17 of the law, first paragraph, point 3, the average number of employees shall be established in accordance with the law "on the annual accounts of companies" article 24.
84. Article 18 of the law, part of the fourth agricultural activities also include tree planting, poultry farming, beekeeping, rabbit keeping and zvērkopīb. Inland waters fisheries is fish farming bodies-private waters or the taxpayer transferred in water use.
85. Article 20 of the law on the application of the first paragraph of a certain Cabinet on 24 September 1996, the Regulation No 367 "order in which public organizations (funds), religious organizations and public institutions are granted or revoked permission to receive donations, donors receive a corporate tax incentives".
86. Article 20 of the law set out in the tax credit does not apply to the taxpayer for the taxation period in which the second-the first of the month is the corporate income tax (profit tax) debt over the previous tax period.
87. The application of article 22 of the law, the first paragraph, the Cabinet of Ministers on 19 January 1999, Regulation No 19 "provisions for corporate tax return". If the taxpayer during the taxation year end to pay tax, liquidation or reorganisation, the Declaration shall be submitted not later than 30 days after the extraordinary (closing or winding-up) the approval of the balance sheet.
88. The application of article 23 of the law, the first paragraph, in accordance with the pirmstaksācij period, the consumer price index adjustment for the period until the next review submission deadline specified advance payment (calculated on the basis of the corporate income tax return for the period before the pirmstaksācij period) for the period from the beginning of the tax period and the review on the pirmstaksācij the month of the period.
89. The application of article 23 of the Act 1.1 part advances reviewed no more than once a month.
90. the individual (family) Enterprise (also farmer's and fishermen's farm), on which its owner pirmstaksācij revenue period has been paying individual income tax and the tax period in which you are registered as a corporate taxpayer, the advances made during the tax period in the following order: 90.1. for each month of the tax period the first month until the month in which the holder has submitted the annual income declaration for the pirmstaksācij period (but no later than 1 April) -an amount equal to one twelfth of the tax, which is calculated from the operating income of the taxation period prior to the period of pirmstaksācij, and adjusted in the light of certain Central Statistical Bureau of the pirmstaksācij the total annual consumer price index;
90.2. for each month of the tax period-the remainder of the amount that is determined by calculating the difference between the business owner of the year's income statement for the period pirmstaksācij the calculated income tax from business income (adjusted in the light of certain Central Statistical Bureau of the pirmstaksācij the total annual consumer price index) and the first months of the tax period up to the year of the owner's income declaration for the month (including) the amount of taxes paid and dividing the difference by the number of months that of the Declaration a month remaining until the end of the tax period;
90.3. where the calculated monthly advance payment amount is less than 500 lats, the advance payment can be made on a quarterly basis of article 23 of the law in the fifth subparagraph, the time limit specified.

91. in applying article 23 of the law on the eighth, a company created for the tax year, you can voluntarily make tax advance payments for the year pēctaksācij also in January, February, March and April.
92. the transitional provisions of the law 7 rules for the application of certain of the Cabinet of Ministers of 18 April 1995, Regulation No 101 of the "rules for the order in which the display is deleted or reduced payments for losses incurred in 1992".
93. Be declared unenforceable: 93.1. The Cabinet of Ministers of 8 august 1995 No. 248 "provisions of the law" On enterprise income tax "application rules" (Latvian journal, 1995, 121. no; 1996, 53, 95 no);
93.2. Cabinet of Ministers of 19 March 1996, Regulation No 72 "amendments to the Cabinet of Ministers of 8 august 1995 No. 248" provisions of the law "on enterprise income tax" application rules "," (Journal of Latvia, 1996, no. 53);
93.3. Cabinet of Ministers of 28 May 1996, Regulation No 187 of the Cabinet of Ministers "Amendments 8 august 1995 No. 248" provisions of the law "on enterprise income tax" application rules "," (Journal of Latvia, 1996, 95 no).
 
Prime Minister a. Smith financial Minister g. Smith