Taxes COVID-19

The Cabinet of Ministers confirmed the criteria and procedure for obtaining support in which companies of any industry that were affected by the COVID-19 crisis can receive allowance for idle time and tax deferral thereof for up to three years.

Question: What is an idle time?

Answer: The idle time is when the employer does not provide work to an employee or does not perform the activities necessary for the acceptance of employee’s obligations due to the spread of COVID-19.

Question: Who is entitled to receive allowance for idle time and division of the payment for late tax payments in instalments or deferral thereof for up to three years?

Answer: The companies are entitled to apply for the allowance for idle time and the division of the payment for late tax payments in instalments or deferral thereof for a period of up to three years if:

• the revenues of which in March or April 2020 in comparison with the respective month in 2019 economic activity have decreased by at least 30 per cent due to the spread of COVID-19;
• the revenues of which in March or April 2020 in comparison with the respective month in 2019 economic activity have decreased by at least 20 per cent due to the spread of COVID-19, and they meet at least one of the following criteria:

• • in 2019, the export volume of the employer affected by the crisis amounts to 10 % of the total turnover or is not less than EUR 500 000;
  • the average monthly gross work remuneration disbursed in 2019 is not less than EUR 800;
  • as on 31 December 2019, long-term investments in fixed assets are at least EUR 500 000.

Question: What conditions must be met to receive allowance for idle time?

Answer: The following conditions must be met in order to receive allowance for idle time:

1. all tax returns and annual statements for the period of last 12 months before the emergency situation (from February 2019 till February 2020) must be submitted to the State Revenue Service;
2. on 7th of March 2020 company does not have a tax debt of more than EUR 150 and an extension of the payment term has not been granted;
3. the company is not excluded from the State Revenue Service Register of Value Added Tax Taxable Persons, or its economic activity is or was not suspended;
4. no insolvency proceedings are in effect;
5. within the last six months before the declaration of the emergency situation calculated taxes are at an average amount not less than EUR 200 per month;
6. company has submitted a justification, which shows the deterioration of financial situation in connection with spread of Covid-19;
7. the employee has commenced the employment relationships before 1st of March 2020;
8. the employee is not the member of the board and council;
9. if over the past 3 years in a tax audit it is not established that taxes were reduced by more than 3% of all of the revenues of the employer from the taxes administered;
10. if a member of the board or the owner of the company in the previous year was not fined for violation of tax laws, customs laws or labor laws in the amount of more than 151 euros for one violation or 500 euros for all violations for the year.

Question: What are the conditions to apply for the division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years?

Answer: The State Revenue Service decides on the division of payment of the company’s tax debt or on providing the company with a tax holiday of up to three years based on the conditions specified in article 24 of the Tax and Duty Law:

1. does the taxpayer comply with the deadlines for the payment of regular tax payments established by the regulations governing the specific tax;
2. whether the taxpayer was previously provided with an extension of the deadlines for paying tax payments and was the taxpayer complying with the tax payment procedure established therein;
3. does the taxpayer comply with the deadlines for submitting tax and informative declarations, which are regulated by regulatory acts in the field of taxes;
4. does the taxpayer cooperate with the tax administration;
5. does the taxpayer has any violations during the last tax audit.

Question: Which industry companies are entitled to receive allowance for idle time and division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years?

Answer: Companies operating in ANY INDUSTRY are entitled to receive allowance for idle time and division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years.

Question: What amount is provided for allowance for idle time?

Answer: The allowance for the idle time shall be determined in the amount of 75 % of the average monthly gross work remuneration for the period of last six months before the declaration of the emergency situation by considering the information at the disposal of the State Revenue Service (data declared by the employer to the State Revenue Service), or in accordance with the actual data declared by employees within the previous six months, but not exceeding EUR 700 per calendar month.

Question: How can I apply for a idle time allowance or division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years?

Answer: An application to receive allowance for idle time or division of the payment of late tax payments in instalments or deferral thereof for a period of up to three years must be submitted in the electronic declaration system of the State Revenue Service: https://eds.vid.gov.lv/