Several amendments to the Value Added Tax Law
Coming into force in July 2019
- From 1 July the reverse value
added tax (VAT) procedure shall not be applied to services related to metal
goods any more, and the range of the metal goods applicable with the reverse
VAT charge has also been reduced. Annex 7 to the Cabinet Regulation
No. 17 “Procedures for Applying the Norms of the Value Added Tax and
Individual Requirements for Payment and Administration of Value Added Tax” of
3 January 2013 stipulates the combined nomenclature codes of those ferrous
and non-ferrous semi-finished metals deliveries of which shall be subject to
the special VAT procedure also following 1 July. Amendments to the VAT Law explain that
the reverse VAT charge shall be applicable to construction products and
household electrical appliances until 31 December 2019; however, the Ministry
of Finance has addressed the European Commission with a request to allow
application of the special procedure also after 31 December 2019.
- Several new notions like “voucher”, “single purpose voucher”, and
“multiple purpose voucher” have been introduced. “Voucher” is an instrument which is to be
accepted as a compensation or partial compensation for delivery of goods or
provision of services and which or the documents related to which, including
the conditions of using such an instrument, specifies the goods to be delivered
or services to be provided or the identity of the potential suppliers or
Single purpose voucher differs from a multiple purpose voucher with the fact
that in case of a single purpose voucher the VAT rate applicable to the service
or delivery of goods is known. A single purpose voucher can be, for example, a
public transport season ticket, entrance fee to some entertainment or sports
event. While a multiple purpose voucher would be a gift card at a shopping
center, pharmacy, health care center, because it is not known at the moment of
purchasing the gift card what VAT rate will be applicable to the services or
goods purchased by the client. Section 111 of the VAT Law lays
down the procedure for applying VAT to voucher transactions, Section 371
defines the taxable value, and Section 124 identifies the moment when the
VAT shall be included in the VAT declaration.
To reduce the administrative burden of companies and promote the
involvement of especially small and medium-sized companies in cross-border
e-commerce transactions, Section 27 of the VAT Law has been amended
specifying that the place of supply of electronic communications, broadcasting
and electronically supplied services shall be determined in the service provider’s
Member State if the total value of the cross-border service does not exceed
10,000 euro (excluding VAT).
The procedure for issuing of VAT invoice for
electronic communications, broadcasting and electronically supplied services
has been specified stating that the requirements of the identification country
shall apply in such cases.
However, the SRS shall send a
warning to the VAT payer before deciding on the exclusion of the taxpayer from
the VAT Register; in the warning the SRS shall inform the taxpayer on its
rights to exclude a registered VAT payer from the SRS VAT Register and invite
the registered VAT payer to provide a written explanation of the actual
conditions of the current situation.
- From 12 July
legal norms enter into force that will extend the rights of the State Revenue
to exclude registered VAT payers from the VAT Register, if the VAT payer has
not declared any transaction during the last 6 calendar months at least or
if the VAT payer changes all of its officials.
Similarly, the taxpayer will have the right to
provide explanation to the SRS and/or to meet the SRS representatives in order
to justify its necessity for the VAT payer status, within 20 days
following the warning.
On the basis of Paragraph 35 of the
Transitional Provisions, by 20 September 2019 the SRS shall only exclude
those VAT payers from the SRS VAT Register who have been registered in the SRS
VAT Register during 12 calendar months at least and have not identified
any transaction in the VAT declarations for the last 12 calendar months by
20 July 2019. To exclude such a VAT payer from the SRS VAT Register, the
SRS shall not be obligated to send a warning to the taxpayer regarding its
exclusion from the SRS VAT Register.
More strict conditions
for receiving permits for a special VAT regime applicable to import
transactions have also been laid down.
On 1 January 2021, amendments to the
procedure for paying personal income tax will enter into force.
On 21 May 2019, the Saeima adopted
amendments to the law On Personal Income Tax. Most significant changes:
- single tax account has
- single term for tax
payments has been laid down — 23rd date of each month;
- declaration shall be
submitted until the personal income tax payment date.
prepared by Leinonen Latvia, Tax & Legal Advisory Department.