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One of the main reasons for Latvia to be selected as the 14th investable country in the world is the facilities and incentives it provides to investors. One of these incentives is in the tax area. Investors benefit from provided incentives according to their circumstances. Thus, they can make use of a much larger part of the capital on their investments. So, what are the tax incentives for investment in Latvia? What are their rates? Special economic zones and all the details are in our article.
Special Economic Zones (SEZ) in Latvia
While Latvia provides entrepreneurs with business establishment support, it also provides tax cuts and incentives. There are special economic zones in this country with different conditions for investors. There are 5 such zones and their general conditions are similar. However, it should be noted that the advantages they will provide will vary depending on the type of investment. Special economic zones in Latvia are:
Information should also be given about the locations of the above zones. Latgale SEZ is considered as a gateway to the Russian market. It is extremely important to have railways and to be close to Russia. Similar expressions can also be used for Rezekne SEZ. Significant incentives are provided in investments in special economic zones mentioned here such as corporate tax, property tax, management fees, and withholding tax. The outstanding of these incentives are as follows: [1]
- Up to 80% discounts in property tax (from the initial 1.5%)
- Discounts up to 80% in corporate tax (from the initial 15%)
- Discounts up to 80% in withholding tax
Tax incentives applied in special economic zones are generally like this.
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Holding Company Regime Incentives
A company will need to be established for investments in Latvia. After this stage, the relevant company can benefit from some incentives through the holding company regime. Such incentives are deemed void in transactions with tax haven countries, regions, organizations, and individuals. For the most up-to-date and detailed information about incentives, you can send your questions to the Investment Incentives Department via e-mail.
Other Tax Incentives in Latvia
Apart from the above-mentioned ones, there are also different tax incentives in Latvia. Some of these are direct incentives, while others are indirect incentives. Information on these is as follows:
1. Donation
Donations made to some state-funded institutions in Latvia can provide discounts of up to 85% in corporate tax.
2. Tax Deferral
One of the tax incentives is the deferral of current tax debts. When an enterprise or factory replaces the machines it uses, this is covered and its taxes are deferred.
3. Huge Investment Incentives
If an investment of more than 10 million Euros is to be made in Latvia, a discount may be requested for corporate tax. Discounts will be made at different rates depending on the size of the investment.
CONCLUSION
The tax incentives in Latvia are generally as mentioned. Related incentives attract investors from different parts of the world. It can be expressed as an extremely positive environment for entrepreneurs to realize their ideas. Please note that binding provisions on taxation can only be issued by the Latvian State Revenue Service!
Igors Krumins continues his activities as a commercial and international lawyer within the body of “Jurmala Invest”. He has more than 10 years of experience, especially in the investment sector, and has provided consultancy services to numerous companies with his legal expertise. He successfully completed his undergraduate studies at Baltic International Academy and graduate studies at Latvijas Universitate. Apart from his native Latvian language, he can also speak Russian and English fluently.
