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Newsletter from Latvia

2019-06-20

Amendments made to the Law on Declaration of Cash on the State Border, Law on Tax and Duties and the Law on VAT

The Parliament has supported the amendments made to the Law on Declaration of Cash on the State Border, obliging everyone to declare cash from EUR 10 000 on the state border. The amendments provide that all natural persons, when crossing the state border (whether incoming or outgoing) with cash money from EUR 10 000 will have to fill out a form, in which they indicate information about the owner of the money, its receiver, where it came from and how it is going to be used, as well as the route that is going to be taken. If any of the information provided in the form is false, the competent authorities have a right to issue a monetary fine in the amount of 25% of the declared sum and also start criminal proceedings against that person. The amendments come into force on July 1, 2019. 

Furthermore, amendments are being made to the Law on Tax and Duties, which provide to reduce the number of transactions with cash. From May 1, 2019 taxpayers, including natural persons, which are not carrying out any economic activities, are no longer allowed to deal with real estate in cash, regardless of the amount of the transaction. To those transactions, which have been conducted before May 1, 2019 and whose operation is continued after this date, and which is planned to be conducted partially or fully in cash, the ban on cash transactions applied from January 1, 2020. Before these amendments it was possible to make cash transactions, if the sum was below EUR 7 200, but now they are prohibited fully. These amendments came into force on May 1, 2019.  

Additionally, according to the amendments made to the VAT Law, the State Revenue Service (SRS) will now have broader rights to stand against VAT fraud schemes. The law has been supplemented with broader rights for the SRS tax administration, according to which, the SRS, until September 20, 2019, will have to exclude such registered taxpayers, which in their declaration for the last 12 months will not have mentioned any transactions. Furthermore, if, in the VAT declaration for the last six months, no transactions will be mentioned, the SRS merchant could be excluded from the registry, if, while evaluating the information provided by the merchant about his economic activities, there is a risk of non-payment of the tax, which can cause losses to the state budget. Similarly, an SRS merchant could also be excluded from the taxpayer registry, if the company has changed all of their officials and the tax administration has basis to see risks for non-payment of taxes. This amendment is based on the finding that this type of action is related to VAT fraud or avoidance of tax payment. Furthermore, the amendments are also made to the criteria regarding the application of a special VAT regime in order to not pay the VAT while importing goods into Latvia.

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