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Saturday 04.04.2020 | Name days: Valda, Herta, Ārvalda, Ārvalds

Latvian government compiles all support measures for Covid-19-related damages in one law

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support programme, support, businesses, Covid-19, Finance Ministry, coronavirus, businesses, State Revenue Service, VIDLatvia’s government has developed a unified legislative draft about threats to the state and prevention of consequences from coronavirus Covid-19, as reported by Finance Ministry.

The legislative draft mentions how the Cabinet of Ministry determines the industries in which emergency expenses have surfaced in the relation to the spread of Covid-19, the measures and support mechanisms applicable to them. The government may review and expand the list of industries affected by the crisis. It mentions that taxpayers from industries affected by the crisis have the right to apply for tax holidays.

Companies are able to request an extension of the repayment term for delayed tax payments that were previously extended in accordance with the Taxes and Duties Law if the delay was caused as a result of Covid-19. To receive it, taxpayers have to submit a motivated application no later than two months after the term or the law comes to force.

The Tax Administration has the right to divide repayment into terms or postpone repayment for up to three years from the day the application is submitted. Tax payments applied with extension for repayment will not be expanded with a penalty fee.

As for guarantees, conditions mention that the programme includes the possibility of providing support of up to EUR 100 million per every 10-15 million euros of risk coverage. The law also states that small and medium-sized businesses, large companies and those who ended up in difficulties prior to Covid-19 crisis are also eligible for support.

Guarantees are provided for existing commitments (investment loans, financial leasing).

Conditions to receive loans in situations of a crisis provide for supporting small, medium-sized and large companies that had not ended up in financial difficulties before Covid-19 crisis. The maximum permitted amount is EUR 1 million with a maximum repayment term of up to three years. The legislative draft also mentions that for the allocation of the loan there will be a reduced and subsidized rate, the ministry reports.

Support measures for all companies state that PIT payer may refrain from paying an advance payment for 2020 taxation period. The condition is applicable for advance payments from 1 January 2020 onward and they are voluntary, the ministry says.

Read also: Latvian government forms special group to support businesses and prevent Covid-19 damages

Between 1 April 2020 and 31 December 2020 VAT return policy will be governed by this law.

In a three-year period (2021-2023) the State Revenue Service (VID) is authorized to not make any negative decisions in regards to deepened cooperation programme participants if they are affected by the crisis created by Covid-19 and participants of the deepened cooperation programme are able to provide evidence of objective conditions of their problems, as provided by the support measures outlined in the law, the ministry reports.

Support measures for Covid-19 state of emergency also relieve alcohol used for the production of disinfectants from excise tax. VID is permitted to provide businesses with a special permit to perform storage operations and who manufacture alcohol with an excise tax discount of up to 90%.

These businesses have to inform VID about alcohol production commencement no later than one work day prior to commencement of the manufacturing process using EDS.

The legislative draft also includes Justice Ministry’s questions about delays with delays in civil liabilities. It also includes conditions for budget flexibility in order to quickly resolve the matter of funding allocation for industries affected by the crisis.

If employers working in the industries affected by the crisis do no employ workers or if the company is idle, the law provides for the Cabinet of Ministers to compensate idle workers’ wages up to 75% of the remuneration set by the Labour Law, but no more than EUR 700 per calendar month.

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