A new option for taxpayers have come into force in Latvia. It provides residents more favourable reductions in payments, as confirmed by representatives of the State Revenue Service (VID).
VID explains that the new agreement provides for the possibility to reduce the late payment fee by up to 85% and reduce or completely cancel the fine for businessmen and residents for who the service has commenced a tax check and has found unpaid tax debts.
The sooner deals are made, the bigger the reduction of payments will be, VID stresses.
The service reports the terms of the agreement are available within the framework of tax controls and audits started from the 30th of June this year. In inspections initiated by VID before then and which still continue it will be allowed to take advantage of the previously available settlement options that were in place until the 29th of June of this year.
VID notes that generally amendments provide the option to settle conflicts at the start of procedures, even before VID makes the final decision. Similarly, the percentage reduction of penalty payments has been increased, the motivation to conclude agreements faster has been strengthened. The payment term has been extended twice for residents who are not engaged in economic activities, or the payment term is two years instead of one.
“Settlements like that can constructively replace lasting legal disputes and promote the return of quickly unpaid tax payments to the state budget,” VID representatives say.
VID also explains that undeclared and unpaid tax payments can be uncovered through tax control and tax audit. As part of tax control VID looks are specific discrepancies. If unpaid taxes are found, a bill is issued, which consists of the unpaid tax and late fee, the service explains.
Fines are not usually applied after tax control operations. One exception is situations when VID finds illegal manipulations with cash registers. In such situations are added to bills, and they cannot be reduced or cancelled through deals.
A tax audit is a comprehensive inspection that is used in cases of significant and intentional tax avoidance.
In such cases, perpetrators are applied with late payment charges and fine, VID reminds.
A settlement does not remove the requirement to pay taxes. All it does it reduce the late payment and fine amount if all of VID’s calculated payments are done voluntarily within agreed upon terms, as noted by representatives of the service.
During the court proceedings, the agreement stipulates that 55% of the late fee is cancelled at first instance, but the amount to be cancelled at each subsequent court instance decreases by 10%.
Meanwhile, if a settlement in case of an audit is concluded before the VID decision is taken, 60% of the late fee and 60% of the fine are cancelled.
If the agreement is concluded after the decision of the VID, but before the expiration of the time period for contesting or appealing, 50% of the late fee is cancelled, but the fine may be reduced by 85% or 50%, or cancelled completely depending on the severity of the violation committed.
A settlement during court proceedings provides the option to reduce the late fee and fine by 30% to 65% in the first instance. A settlement reaching in every next court instance reduces the amount to be cancelled by 10%.
All payments are to be made to the state budget within one year’s time of reaching a settlement deal. A proportional amount of the total amount is to be paid every month. This does not apply to residents who are not engaged in economic activities – they are to perform payments within two years’ time.
If the repayment terms agreed upon in the settlement deal are not complied with, the settlement deal loses all power, VID reminds.
Also read: Tax revenue for first five months in Latvia exceed plan by 3.2%