Covid-19 in Latvia: The Cabinet of Ministers extends the range of beneficiaries eligible for idle time benefits and tax holidays

02.04.2020 Covid-19 in Latvia: The Cabinet of Ministers extends the range of beneficiaries eligible for idle time benefits and tax holidays

Covid-19: The Cabinet of Ministers has broadened the range of recipients of idle time benefits and tax holidays, prescribing that those whose tax debt is less than EUR 1,000 and companies established after 1 March 2019 will also be eligible to support.

At its 2 April 2020 meeting, the Cabinet of Ministers approved changes to the criteria and procedures for receiving support, whereunder a company suffering from Covid-19 crisis in any industry will be eligible to idle time benefit and tax holidays for a period of up to 3 years.

Initially, in order to qualify for the idle time benefit, the employer should have had a tax debt of less than EUR 150, or, in the event of a higher tax debt, the employer should have had previously agreed with the SRS on an extension of payment period or voluntary payment of taxes. After evaluating the situation and consulting taxpayers, the Cabinet of Ministers decided to raise the tax debt threshold to EUR 1,000, maintaining the condition that in case of higher tax debt, the employer must have an agreement with the SRS.

The Cabinet also noted that many of the employers and taxpayers affected by the crisis have commenced their operations relatively recently and therefore are not able to apply for idle time benefit or tax holidays, as they cannot prove a decrease in turnover compared to March or April 2019.

The new regulation stipulates that the decrease in turnover, if the employer or taxpayer was established between 1 March 2019 and 31 December 2019, shall be calculated by comparing the turnover in March or April 2020 with the average monthly turnover in 2019.

Amendments to the calculation of idle time benefit have been made accordingly – employers, whose operations are under six months, shall calculate the idle time benefit taking into account the average monthly gross salaries for the months worked, but if the operations exceed six months, the calculation shall remain the samethe average monthly gross salaries during the preceding 6 months shall be taken into account.

To eliminate uncertainties, the Cabinet of Ministers has amended the paragraph requiring the employer to make a voluntary reimbursement of the idle time benefit – initially, such an obligation occurred, when the employer recruited new employees or terminated the idle time during the period of idle time benefit payment, while the new wording states that the obligation shall occur when an employer increases the number of employees as compared to the number of employees at the start of the idle time or terminates the idle time.

  • For more information on the support options please click here.
  • Law on Measures to Prevent and Manage National Threats and Consequences of Covid-19 Proliferation is available here.
  • Cabinet Regulation “Provisions for employers affected by the Covid-19 crisis who qualify for idle time benefits for employees and maturity breakdown of tax payments or a deferral of up to three years” are available here.
  • Amendments to Cabinet Regulation “Provisions for employers affected by the Covid-19 crisis who qualify for idle time benefits for employees and maturity breakdown of tax payments or a deferral of up to three years” are available here.