Support to industries affected by the crisis

Extension of tax payment deadline

The Law on the Suppression of Consequences of the Spread of COVID-19 Infection stipulates that taxpayers affected by the crisis caused by COVID-19, are entitled to apply for extension of tax payment deadline until 30 June 2021, as well as to ask to provide extension of tax payment deadline to those delayed tax payments the payment term of which has been extended pursuant to the Law on Taxes and Duties, if the delay was caused due to the spread of COVID-19.

The delay fine for the delayed tax payment to which tax payment deadline extension is applied is not calculated.

Release or reduction of lease payment for a state and municipal authority

State and municipal authorities, as well as capital companies, for the period of the law, release the enterprises operating in the industries affected by the crisis from lease payment or reduce the lease payment.

Those enterprises that comply with the criteria set by the respective municipality are entitled to qualify for the reduction or release from the lease payment

The release of lease payment referred to in the Law on the Suppression of Consequences of the Spread of COVID-19 Infection is effective until 30 June 2021.

Support measures to employers, employees, self-employed persons, royalty receivers and payers of patent fee

Idle time support to employers

Employers whose revenues from operating activities for the specific support month are as follows qualify to apply for the idle time support:

·         Compared to monthly average revenues in August, September and October 2020 have decreased by at least 20%; or;

·         Compared to the revenues of the respective month of 2019 have decreased at least by 30% and the reduction is related to restrictions of operating activity.

The idle time support period is from 9 November 2020 to 30 June 2021 (but not longer than the term when the restrictions of operating activities are determined due to the epidemiological situation).

The idle time support is administered and paid out by the State Revenue Service.

Idle time support to self-employed persons and receivers of royalties

The self-employed persons registered with the State Revenue Service as enterprises, receivers of royalties not registered with the State Revenue Service, and individual merchants.

The State Social Insurance Agency pays the persons who receive the idle time support a bonus of 50 euros per each depended child up to the age of 24 for whom the employee is provided a personal income tax relief.

Idle time support for patent fee payers

The patent fee payers, whose revenues in the month for which the support is requested, compared to average revenues in August, September and October 2020, have decreased by at least 20%, are entitled to apply for the idle time support.

The State Social Insurance Agency pays a bonus of 50 euros per each depended child up to the age of 24 for whom the employee is provided a personal income tax relief.

The patent fee or reduced patent fee for the support period is not payable.

Support for salary subsidies for part-time employees

Salary subsidies are to provide support to compensate remuneration of those who do not work full time.

Those employers whose revenues are as follows are entitled to apply for the support for salary subsidies:

·         Have decreased at least by 20% of the operating activity in the respective month of 2020, compared to average revenues in August, September and October 2020, when the company was actually operating;

·         Have decreased at least by 30% compared to the revenues of the respective month in 2019.

The employer is obliged to pay the difference between the amount of the benefit and remuneration.

The support is available for the period 9 November 2020 to 30 June 2021.

Grant to ensure the current asset flow

The taxpayers, enterprises that comply with the definition of the micro, small and medium-sized enterprise**, as well as large enterprises* registered with the State Revenue Service are entitled to apply for the grant to cover the reduction of current asset flow.

An enterprise, whose turnover in the support period month has decreased at least by 20%, compared to average turnover in August, September and October 2020 in total, and whose turnover has decreased at least by 30% in the support period month, compared to turnover of the respective month in 2019, can apply for the support.

The enterprises can apply for the grant until 15 June 2021 for the period from 1 November 2020 to 31 May 2021. The support can be requested for each support period.

New support programme for shopping centres to compensate decrease in the revenues from lease

A new support programme has been passed by the Cabinet of Ministers to the enterprises affected by the COVID-19 crisis, to compensate the decrease in the revenues from lease.

The support programme will be implemented by the Investment and Development Agency of Latvia. The term for submissions: 15 May 2021.

It will be possible to apply for the support after the approval of the European Commission.

Support measures for the beauty industry

From 1 January 2021 to the date when the prohibition to provide beauty services is revoked, employees, self-employed and patent fee payers in the beauty industry can apply to the State Revenue Services to compensate their salaries and receive idle time support.

Sick leave benefit

One-time sick leave benefit for 14 calendar days is available from 1 January 2021 to 30 June 2021

Sick leave benefit is paid in the amount of 60% of the person’s average salary for which social contributions have been made over the last 12 months.

Sick leave benefit is requested to the State Social Insurance Agency and Personal income tax is not applied to this benefit and social insurance mandatory contributions are not made.

Payment of certificates of incapacity for work

To reduce the spread of COVID-19 in work places and to help employers whose employees suffer from COVID-19 or are in quarantine from 16 November 2020 to 30 June 2021, the state provides and pays sick leave benefit starting from the first day of incapacity for work. In this case medical certificate B is issued.

The amount of the sick leave benefit is in the amount of 80% the average salary for which social contributions have been made.

Support measures in the tax administration sphere

Personal Income Tax

The performers of economic activity are entitled not to make the applied Personal Income Tax advance payments from the revenues from economic activity for 2021.

Those who pay Personal Income Tax for their revenues (enterprises, individual merchants or owners of the individual enterprise), for the taxation year 2020 and 2021, are not applied the restriction of the amount of revenues in the amount of 80% of the revenues for those with single-entry accounting and minimum amount of taxable revenues at least 20% of the revenues for those with double-entry accounting.

In 2021, Personal Income Tax and State social contributions from minimum wage are not payable upon certain criteria.

The time period for submission of the annual declaration is extended for those persons to whom submission is mandatory. The term for submission of the annual declaration for 2020 is 1 July 2021.

The payment term for PIT calculated in the annual declaration is extended.

Value Added Tax

As of 1 January 2021, amendments to the VAT Law are applicable, based on which VAT shall be repaid within 30 days after the VAT declaration submission term.

Enterprise Income Tax

Expenses related to operating activities of an Enterprise Income Tax payer are goods and services presented as gifts to social groups negatively affected by the emergency situation (without personalising the receiver for the purposes of receipt of Personal Income Tax), as well as to persons whose basic operating activity is provision of medical services, education, charity, assistance to low-income persons, persons with disability or children.

Enterprise Income Tax payer who has made donations to reduce the consequences of the spread of COVID-19, in line with the Law on Enterprise Income Tax, is entitled to increase the amount of donations that is not included taxable base of Enterprise Income Tax by three per cent of the profit for the previous reporting year after taxes.

Law on the Annual Financial Statements and Consolidated Financial Statements

The enterprise to which the Law on the Annual Financial Statements and Consolidated Financial Statements applies is entitled to submit the annual report and consolidated annual report for 2020 within the term that exceeds the prescribed submission term by three months.

Handling of Alcoholic Beverages Law

Retail sales of alcoholic beverages, except for duty-free stores, is allowed on website or mobile application, if the requirements of the Handling of Alcoholic Beverages Law are complied with.

In-depth cooperation programme

In 2021, 2022 and 2023, the State Revenue Service is entitled not to pass a negative decision in regard to the members of in-depth cooperation if they have been impacted by the COVID-19 crisis and the member of in-depth cooperation programme provides evidence of circumstances.

Immovable Property Tax

In 2021, municipalities are entitled to determine Immovable Property Tax payment terms that differ from those stipulated in the Law On Immovable Property Tax, transferring it to a later term in 2021.

Support provided by the State Development Finance Institution “Altum” / COVID-19

Loan of current assets / COVID-19

Loan of current assets is liquidity support to performers of economic activity whose operations were affected by the spread of COVID-19.

The amount of support is up to 1 million euros, but total amount of the loan cannot exceed at least one of the criteria:

–       25% of the turnover of enterprise, farm or fishery in 2019;

–       Double amount of expenses for remuneration (including social contributions) in 2019 (for those established in 2019, the planned amount over the period of two years);

–       The necessary liquidity amount to ensure operating activity for the next 12 months.

Support to exporters / COVID-19

Restrictions on export guarantees have been cancelled to the European Union Member States and some OECD Member States.

The maximum amount of liabilities for losses incurred due to one foreign enterprise is 2 million euros.

Guarantees of large enterprises* / COVID-19

Large enterprises* are entitled to apply for the support who can prove the adverse impact of COVID-19.

The amount of financial services covered by the guarantee cannot exceed 25% of the enterprise’s turnover of 2019.

The guarantee covers up to 70% or 90%:

–       In case of new financial services: from the outstanding principal amount, maximum guarantee up to 15 million euros;

–       In case of existing financial services: for delayed loan principal issued by the bank. For the delayed loan principal, the minimum balance of financial service at the bank amounts to 10 million, the maximum Altum guarantee is 15 million euros.

The goal of the loan issued by the bank to which the guarantee is used, is:

–       Loan to make investments;

–       Loan to finance current assets, including credit limits (credit lines and overdrafts);

–       Financial leasing, limits of financial leasing.

The support is available until 30 June 2021.

Guarantee for loan repayment holidays / COVID-19

The enterprises who have faced objective difficulties to make loan payments to banks due to the spread of COVID-19, are offered loan guarantees that allow to take loan repayment holidays or deferred payment of loan principal to the bank.

Micro, small, medium-sized** and large enterprises* can apply for the guarantee.

The amount of financial services covered by the guarantee does not exceed 25% of the total turnover of the person conducting economic activities in 2019, and the maximum amount of guarantee does not exceed 5 million euros.

The guarantee covers 50% of the amount of financial service (the outstanding amount as at the moment of issuance of the guarantee).

The support is available until 30 June 2021.

Equity fund / COVID-19

The financing is available to large enterprises* whose operations were affected negatively by COVID-19, as well as those large enterprises who are ready to adapt or transform their current commercial activity model in line with the current business and life challenges.

Supported types of investments or combination of these types of investments to solve the enterprise’s financial needs:

–       Investment in share capital;

–       Mezzanine funding with an option to convert the loan into shares;

–       Purchase of enterprise’s debt securities emission in the alternative First North or Baltic regulated market.

The amount of investments for one enterprise is up to 10 million euros.

Loans to large and medium-sized enterprises / COVID-19

The loans are issued to retain and increase exports and competitiveness, as well as to implement feasible projects:

–       For long-term material and non-material investments along with the loan issued by credit institution, leasing company or other financial institution;

–       The loan will be subordinated based on the loan issued by other creditor with lower level of security;

–       Up to 15 million euros and not more than the loan issued by another institution;

–       Term up to 20 years, not exceeding the useful life of the assets to be purchased and amortisation term.

Planned support for the culture industry enterprises | COVID-19

The Cabinet of Ministers has approved the support for feasible culture industry companies that provide art, entertainment and leisure events and whose operations were affected by the COVID-19 pandemic.

Within the framework of the programme, those working in the industry are provided support in the form of loans and grants in total in the amount of 6 million euros.

It will be possible to apply for the support after the support programme is approved by the European Commission.

* Criteria to determine the status of small, and medium enterprises

Enterprise is considered the large enterprise, if the number of employees is above 249 employees and one of the financial indices applies:

–       Annual turnover exceeds 50 million euros and/or;

–       The balance sheet value of the enterprise is more than 43 million euros.

** Micro enterprises are enterprises that employ less than 10 employees and whose annual turnover or annual balance sheet value does not exceed 2 million euros.

Small enterprises are enterprises that employ less than 50 employees and whose annual turnover or annual balance sheet value does not exceed 10 million euros.

Medium enterprises are enterprises that employ less than 250 employees and whose annual turnover does not exceed 50 million euro or annual balance sheet value does not exceed 43 million euros.

! To determine the category, the company data are summarised with the related companies and partner companies. If the company, based on the number of employees, would be included in one category, but, based on the financial data, in another, a higher category shall be selected.

Conditions to provide each financial support instrument set by the State Development Financial Institutions “Altum”, the amount of support, repayment term and other conditions shall be determined considering the specifics of the enterprise’s operations and other aspects.