Tax Changes in 2010
Personal Income Tax
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Increase general personal income tax rate from 23% to 26%
Broaden personal income tax base, including all capital income, applying 10% tax rate to dividends and interest
payments and 15% rate to capital increase (all capital income, including dividends, should be taxed as of 2010)
Impose personal income tax on the benefit gained from the use of employer’s (company’s) passenger car for
personal needs
Decrease the amount of PIT non-taxable present of the employer from the amount of nominal wage (Ls 180) to
Ls 0
Increase the tax rate for self-employed persons (performers of economic activities) applying general personal
income tax rate
Impose tax on presents exceeding 1000 lats per year if they were received from a person having no marriage or
kinship relations with the presentee up to third generation (in terms of Civil Law). If the presenter has marriage
or kinship relations with the presentee up to third generation (in terms of Civil Law) and descending kin, then
the present should not be subject to the tax
Apply tax on expropriation of growing forest for cutting and expropriation of wood materials obtained from
such forest, apply 10% rate only to the owner of the forest (norms referring to economic activities should be
applied to intermediaries)
Decrease non-taxable amount of revenue from agriculture production and provision of rural tourism services
from 4000 lats to 2000 lats per year
Change tax incentives for reserves (in private pension funds, insurance companies and investment funds)
Include in calculation of taxable income sums paid as state aid to agriculture or EU aid to agriculture and rural
development
Revise personal income tax eligible expenditure for education and treatment services referring to services
received in 2010 decreasing the limit of expenditure from 300 lats to 150 lats (impact in 2011)
Impose personal income tax (wage tax) on income from leased personnel
A procedure was prescribed envisaging possibility to pay patent fee in particular sectors
Real Estate Tax
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Increase tax on land and buildings used for economic activities till 1.5%
Impose nominal tax payment 5 lats from each taxable object (land, building)
Impose increased 3% rate on non-cultivated agriculture land
Broaden real estate tax base imposing 0.1% rate on dwelling houses with cadastral value up to 40 thousand lats;
0.2% - with cadastral value 40001-75000 lats; 0.3% - with cadastral value above 75 thousand lats
Impose RET on engineering technical constructions
Excise Duty
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As of January 1, 2010, impose nominal excise duty level on cigarettes – 48 lats per 1000 cigarettes, as well as
cancel condition regarding tax repayment for heavy fuel oil for heating purposes and hot water production
(hereinafter excise duty rate 11 lats per 1000 kilograms will be imposed)
As of February 1, 2010, increase excise duty on wine and fermented products from 40 lats (per 100 litres) till
45 lats or by 12.5% and on intermediate products with absolute alcohol content not exceeding 15 per cent by
volume (including) from 42 lats (per 100 litres) till 45 lats (per 100 litres) or by 7.1%
As of April 1, 2010, implement computerized Excise Goods Transportation and Control System specifying
correspondingly the terms, scope of tax payers, norms regarding excise goods transportation applying payment
of postponed excise duty within the computerized system and other provisions in the Law
As of May 1, 2010, impose tax on natural gas for heating purposes applying rate 15.60 lats per 1000 m3 and
natural gas used as fuel applying rate 70 lats per 1000m3
As of July 1, 2010, impose decreased excise duty rate – 15 lats per 1000 litres – on fuel for heating purposes if
it contains rapeseed oil or biodiesel fuel produced from the rapeseed oil; however on fossil fuel for heating
purposes the rate will be 40 lats per 1000 litres
Tax on Cars and Motorcycles
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Calculate tax on previously not registered cars or cars registered abroad after January 1, 2010 according to the
amount of carbon dioxide emissions, however on motorcycles – according to the engine capacity (m3)
Corporate Income Tax
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Decrease the amount of representation expenditures deductable from taxable amount from 60% to 40%
For purposed of corporate income tax calculations increase by 1.5 times the part of costs excluded from
expenditure not related with the economic activity and losses caused by maintenance of social infrastructure
objects
Broaden possibilities for tax payers to decrease their advance payments if the profit has decreased. It is also
planned that in case the difference between the resulting calculation of the tax and decreased advance payments
calculated by the tax payer does not exceed 20% of the resulting tax calculated in the taxation year the tax sum
to be paid additionally will not be considered as a delayed tax payment and delay interest will not be imposed
on it
Value Added Tax
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Specified norms regarding VAT taxation period
It is stated that VAT statements on taxation year should be submitted only in separate cases prescribed by the
Law
Special VAT payment procedure and pre-tax deduction procedure (“cash principle”) has been prescribed for
separate groups of taxable persons
The term for tax payment to the state budget has been prolonged – till 20 days after the end of taxation period
VAT compensation amount for farmers increased from 12% to 14%
New, improved VAT repayment system has been introduced referring to overpaid VAT sum starting from July
1, 2010
For tax calculation purposes documents without signature and stamp confirming transaction not exceeding 20
lats without tax can be used (it is not necessary to confirm cheques with stamp and signature anymore)
Customs value of imported goods subject to VAT has been specified in the goods import transaction, and VAT
collection procedure has been prescribed for cases when actual value of imported goods is not known at the
moment of import
In relation with cancellation of delivery notes with SRS numbers it is stated that one of details in the VAT
calculation is serial number of one or more series uniquely identifying the bill, and new statement on goods
delivered and services provided inland has been introduced
The place of supply of services specified according to Council Directive 2008/8/EC of 12 February 2008
amending Directive 2006/112/EC as regards the place of supply of services
Annual Duty on Transport Vehicles
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The following duty rates have been increased: on motorcycles 24 lats (currently 3 lats); cars up to 1500 kg 24
lats (currently 12 lats); 1501-1800 kg 48 lats (currently 24 lats); 1801-2100 kg 75 lats (currently 45 lats); 21012600 kg 95 lats (currently 54 lats); 2601-3500 kg 115 lats (currently 72 lats); 3501 kg and more 150 lats
(currently 78 lats).