Global

Details

  • Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/25/2012

Latvia - New transfer pricing documentation rules, APAs 

July 25:  Changes to Latvia’s tax laws include new transfer pricing rules (generally effective 1 January 2013) and transfer pricing documentation requirements (effective 26 July 2012).

Documentation

Latvia’s tax law provides that taxpayers must justify a related-party transaction’s “market price” (arm’s length price).


Transfer pricing documentation is required for taxpayers having transactions with related parties if:


  • The Latvian taxpayers have a net turnover for the applicable year of LVL 1 million (approximately U.S. $1.74 million); and
  • The related-party transactions have a value exceeding LVL 10,000 (U.S. $17,400).

Taxpayers must produce their transfer pricing documentation reports within one month following a request from the tax authorities. The documentation must be retained for five years. Penalties may be imposed for a prior five-year period if an adjustment to taxable income is made under the transfer pricing rules.

APAs

The new measures also provide that taxpayers may enter into advance pricing arrangements (APAs) with the tax authorities, in an effort to reach an agreement on the market price for an intra- group transaction. APA fees are to be established by the Cabinet of Ministers.


Read a July 2012 report [PDF 57 KB] prepared by the KPMG member firm in Latvia: Tax news – amendments to Latvian tax laws




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