Valsts ieņēmumu dienests (State Revenue Service) has introduced new Corporate Income Tax (CIT) rules that are bound to motivate entrepreneurs like you. Here’s what you need to know:
The primary aim is to encourage businesses to invest in their development, improve capitalization, and attract funds for further expansion.
With the new CIT payment procedure, the investment landscape in Latvia is more appealing than ever. Here are the key advantages for taxpayers:
1️⃣ 0% CIT Rate for Reinvested Profit: CIT won’t be paid on profit that’s reinvested in the business. This is a fantastic incentive for entrepreneurs looking to fuel growth.
2️⃣ 20% CIT Rate on Distributed Profit: CIT is only applied to profit shares distributed as dividends or used for purposes not directly related to business development. If you reinvest your earnings, you’re not liable for profit tax. This is a game-changer for international companies investing in Latvia.
3️⃣ No CIT Advance Payments: As of July 1, 2018, CIT advance payments have been abolished, giving companies more flexibility and resources for business development.
4️⃣ CIT Reduction through Donations: Companies can reduce their CIT payment by donating to public benefit organizations, budget institutions, and more. This incentivizes corporate social responsibility.
Remember, the CIT Law allows you to defer tax payment until profit is distributed or used for non-development expenses. This means you pay tax only when profit is distributed as dividends or for other non-business purposes.
📌 Submitting Your Declaration:
Use the State Revenue Service’s Electronic Declaration System to fill out your corporate income tax declaration for each taxation period. If you have no taxable objects in a given month, you can choose not to submit a declaration (except for the final month of the reporting year).
Submit your declaration and pay taxes every month by the 20th of the following month. For taxpayers on a quarterly cycle, the deadline is the 20th of the month following the relevant quarter.
💰 Tax Rates:
The standard CIT rate is 20% applied to the tax base, which includes distributed profit and conditionally distributed profit.
🗂️ Corporate Income Tax Rebates:
Rebates are available to companies based on their specific tax base. For more details, please contact the State Revenue Service of Latvia.
BL Grāmatvedība will help you in the process! Take advantage of these new CIT rules to drive your business forward and invest in its future. The landscape is more business-friendly than ever!
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