The law provides for the following measures:
General: The Cabinet of Ministers shall determine sectors that have suffered crisis costs (sectors affected by the crisis) due to the spread of COVID-19 and that are therefore subject to measures and special support mechanisms, as well as to set criteria how to determine those who shall receive the same special state support in other sectors;
Sectors: The Ministry of Economics shall propose the respective sectors by 24 March 2020. According to the Cabinet of Ministers, such sectors are passenger transportation, car rental, tour operators, hotels, restaurants, bars, cinemas, museums, sports clubs and fitness centers, amusement and theme parks, exhibition organizing, preschool education, sports, and extracurricular education, etc. The situation will be constantly monitored, and the Cabinet of Ministers will be entitled to supplement the list of sectors respectively;
Employment: If the employer in the sector affected by the crisis is not providing work to the employee or is not performing the activities necessary for the acceptance of employee's obligations (idle time), up to 75% from the employee’s previous six months average earnings, but not more than EUR 700 per month shall be compensated following the procedure provided by the Cabinet of Ministers. In such the case the employer is entitled not to pay any remuneration. Idle time allowance is not subject to personal income tax (PIT) and state social insurance contributions. The Ministry of Economics shall prepare and submit to the Cabinet of Ministers for review and adoption the respective procedural regulations by 24 March 2020;
Lease: The state and municipal institutions and capital companies will release or decrease lease payments due by the commercial companies and other business persons in sectors affected by the crisis. Default interest or contractual penalty for delayed payments may not be applied, except concerning the utility services (electricity, heating, water) consumed and other property maintenance services;
Loans and guarantees: The State Development Finance Institution ALTUM will provide two support instruments for entrepreneurs affected by COVID-19 crisis - credit guarantees to receive bank credit holidays and loans for an increase of current assets;
Tax: Taxpayers in the sectors affected by the crisis are entitled to apply for tax deferral not later than 2 months after the due date for payment or the date of entry into force of the draft law. The tax administration is entitled to split payment terms or defer payments for up to 3 years from the date of submission of the application. Default interest for late payment is not charged;
Tax: The PIT taxpayers are entitled not to make PIT advance payments from the operating income for the taxation year 2020. This applies to advance payments as from 1 January 2020;
Tax: The overpaid value-added tax (VAT) shown on the VAT return will be reimbursed;
Tax: The State Revenue Service shall not be entitled to take a negative decision to a participant in an in-depth cooperation program if it has been affected by the COVID-19 crisis and has provided evidence of objective circumstances;
Annual reports: The annual reports and consolidated annual reports for the financial year 2019 may be submitted within 3 months after the applicable legal deadline;
Insolvency: Until 1 September 2020, in certain cases, e.g., failure to pay on time, creditors are prohibited to file applications for insolvency proceedings of legal persons;
Tax: Alcohol used for the production of alcohol-based disinfectants shall also be exempt from excise duty during the emergency caused by COVID-19.
Debt recovery: Deadlines for voluntary fulfillment of obligations by the debtors are prolonged, as a result, the right of creditors to realize recovery proceedings may be affected.
The law has retroactive force as of 12 March 2020, when the state of emergency was declared.
To ensure that the above measures become effective certain regulations of the Cabinet of Ministers shall be adopted, which, most probably will be adopted next week.
If you have any questions regarding these measures in Latvia, their impact on your business in general, please do not hesitate to get in touch with your contact person at TGS Baltic or write to:
- Andra Rubene, Partner - firstname.lastname@example.org
- Linda Štrause, Partner - email@example.com