A draft law that will reduce administrative burden and promote cooperation with taxpayers has been submitted for public consultation

The Ministry of Finance has submitted amendments to the Law "On Taxes and Duties" (draft law) for public consultation on the Legal Acts Project (TAP) portal. These amendments include several significant changes and clarifications aimed at reducing the administrative burden for both taxpayers and the administration.

To promote cooperation with taxpayers and simultaneously reduce the administrative burden, the draft law proposes improving the regulation of penalty calculations. It stipulates that penalties for late payments of taxes (excluding customs duty), fees, and other state-mandated payments in the unified tax account will be calculated only twice a month, on the 1st and 15th of each month. Moreover, penalties will not be calculated if the overdue tax payment is received by the next penalty calculation date. Additionally, penalties will not be calculated if a declaration is submitted late, but a payment has been made into the unified account by the due date, which has not been used to cover other liabilities at the time of submission.

Given the increased costs of tax debt collection, the draft law proposes raising the threshold for initiating tax debt collection from 15 to 40 euros. However, the uncollectible tax debt threshold remains unchanged for property tax and will continue to be 15 euros.

To ensure clear and consistent interpretation of legal norms, the draft law proposes excluding the signs of suspicious transactions in the field of taxation from the law. This means that a subject of the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing (Prevention Law) will report a suspicious transaction to the State Revenue Service only if there is suspicion that the funds involved in the transaction were obtained directly or indirectly as a result of a criminal offense in the area of state revenue.

Considering the applicability of the new European Union de minimis aid regulation, from June 30, 2024, the draft law plans to exclude de minimis aid in the fisheries sector from the law – the tax administration's right to reschedule or defer overdue tax payments for up to five years if the Cabinet of Ministers has approved the opinion prepared by the Ministry of Agriculture on the need to support a specific taxpayer in the fisheries sector in overcoming financial difficulties related to the restrictions imposed by Russia. It should be noted that since August 1, 2022, all taxpayers whose economic activities have been adversely affected for a prolonged period by circumstances of force majeure have access to a support solution – an extended tax payment deadline of up to five years. This permanent legal support regulation has been developed to avoid creating new support regulations in several laws related to overcoming specific crises when the tax payment deadline delay is caused by specific force majeure circumstances, including the armed conflict initiated by Russia in Ukraine.

To limit unregistered economic activity, tax evasion, and other violations, such as illegal and unauthorized trade of goods in the global network, the draft law includes regulations allowing the State Revenue Service to not only disable and suspend domain names but also restrict access to domain names or IP addresses in the territory of Latvia. Thus, the regulation included in the draft law expands the State Revenue Service's ability to act promptly and make decisions regarding domain names registered outside the Latvian zone.

To ensure the correct inclusion of information in the unified electronic working time accounting database, the list of information to be included in the electronic working time accounting system for persons employed at construction sites, as well as for employers and construction initiators, is supplemented. Correct inclusion of information in the said database will improve data quality, thereby enhancing the effectiveness of risk analysis.

The draft law can be viewed on the Legal Acts Project portal.

Information from the Ministry of Finance of the Republic of Latvia

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