Procedures by which the Status of an Independent Small Brewery is Granted and the Rate of Excise Duty is Applied to Beer Produced by Independent Small Breweries

Issued pursuant to
Section 12, Paragraph three
of the Law On Excise Duties

I. General Provisions

1. These Regulations prescribe the procedures by which the status of an independent small brewery shall be granted and the rate of excise duty specified in Section 12, Paragraph two of the Law On Excise Duties (hereinafter - Law) shall be applied to the beer produced by independent small breweries.

2. These Regulations apply to the merchants that have one or several excise warehouses that produce beer (hereinafter - brewery) as well as to other persons in the cases referred to in these Regulations.

3. A brewery shall not be deemed legally and economically independent from other breweries if:

3.1. it owns 10 per cent or more of the equity capital or the amount of shares or stocks in another brewery;

3.2. another brewery has a direct ownership of 10 per cent or more of the equity capital or the amount of shares or stocks in the brewery in question;

3.3. 10 per cent or more of the equity capital or the amount of shares or stocks in the brewery in question are owned by another merchant, where, in its turn, 10 per cent or more of the equity capital or the amount of shares or stocks are owned by another brewery;

3.4. 10 per cent or more of the equity capital or the amount of shares or stocks in the brewery in question is owned by a person or merchant, who, in his turn, owns 10 per cent or more of the equity capital or the amount of shares or stocks in another brewery;

3.5. such brewery produces beer in accordance with a franchise agreement, in compliance with which a franchiser (another brewery) has transferred to the other party of the agreement - franchisee - in exchange for direct or indirect financial consideration, the right to exploit the aggregate of intellectual property rights (especially - the firm name, the trademark, the shop sign, the design object, special professional information, know-how and the patents) for utilisation or marketing of goods; or

3.6. a member of the executive body thereof also holds a position of a member of an executive body in another brewery.

4. Upon the performance of the requirements of these Regulations, the rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law shall be applied to the first 10 000 hectolitres of beer produced in a calendar year, if such beer has been produced:

4.1. in a brewery of the Republic of Latvia, to which the status of a independent small brewery has been granted; or

4.2. in an independent small brewery of another state, which in the previous calendar year produced an amount of beer that does not exceed 50 000 hectolitres.

5. The rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law shall be applied also to beer that has been produced in a independent small brewery, but the merchant that pays the excise duty does not perform other activities with the relevant beer (for example, manufacturing, processing, packaging), except for receipt, storage and export.

6. A merchant shall ensure that the beer (to which the rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law is applied) produced, received and exported by a independent small brewery is recorded and stored separately from other excisable goods.

7. The rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law shall not be applied to beer which has been produced in another brewery but with which the packaging activities are performed in an independent small brewery.

8. Implementation of these Regulations shall be controlled by the State Revenue Service.

II. Beer Produced by Independent Small Breweries of the Republic of Latvia

9. In order to receive the status of a independent small brewery, a merchant shall submit an application (Annex 1) to the commission of the State Revenue Service.

10. The commission of the State Revenue Service shall examine the application and within a period of one month after the receipt of the application shall issue a certificate (Annex 2) that certifies the status of a independent small brewery (hereinafter - certificate), or shall adopt a justified decision regarding the refusal to issue a certificate.

11. The certificate comes into force on the next day after the adoption of the decision by the commission of the State Revenue Service regarding the issuance of the certificate, unless provided otherwise by the decision of the commission of the State Revenue Service. The certificate shall be issued for an unspecified period.

12. The commission of the State Revenue Service shall not grant to a merchant the status of a independent small brewery if:

12.1. the merchant does not conform to the requirements prescribed by these Regulations;

12.2. the amount of beer produced in the brewery during the previous calendar year prior to the submission of the application referred to in Paragraph 9 of these Regulations was more than 50 000 hectolitres; or

12.3. the amount of beer produced in the brewery during the current calendar year prior to the submission of the application referred to in Paragraph 9 of these Regulations was more than 50 000 hectolitres.

13. If the particulars specified in the certificate change, within a period of 10 days after the relevant conditions come into effect a merchant shall submit an application for the re-registration of the certificate and attach the copies of the documents certifying such changes and the original of the certificate.

14. If the beer produced by independent small breweries of the Republic of Latvia, to which, in accordance with these Regulations, provisions are made to apply the rate specified in Section 12, Paragraph two, Clause 1 of the Law is being moved in the Republic of Latvia with a document referred to in Commission Regulation (EEC) No 2719/92 of 11 September 1992 on the accompanying administrative documents for the movement under duty-suspension arrangements of products subject to excise duty (hereinafter - Regulation No. 2719/92), a copy of the certificate is attached to this accompanying document and the number of the certificate is specified in the accompanying document. A separate accompanying document shall be drawn up for such beer, where other goods shall not be specified. When the beer referred to is being moved between the excise warehouses of a single independent small brewery in the Republic of Latvia, the certificate shall not be attached to the accompanying document referred to in Regulation No. 2719/92 and the number of the certificate shall not be specified in the accompanying document.

15. If the beer produced by independent small breweries of the Republic of Latvia, which has been released for free circulation and to which in accordance with these Regulations the rate specified in Section 12, Paragraph two, Clause 1 of the Law applies is being moved to another Member State with the accompanying document specified in Commission Regulation (EEC) No 3649/92 of 17 December 1992 on a simplified accompanying document for the intra-Community movement of products subject to excise duty which have been released for consumption in the Member State of dispatch (hereinafter - Regulation No. 3649/92), a copy of the certificate is attached to this accompanying document and the number of the certificate is specified in the accompanying document.

16. If the beer produced by independent small breweries of the Republic of Latvia, to which in accordance with these Regulations the rate specified in Section 12, Paragraph two, Clause 1 of the Law is applied, is being moved or marketed with a strict accountability bill of lading-invoice, the number of the certificate shall be specified therein in addition to the information prescribed by the regulatory enactments regarding the drawing up of bills of lading-invoices and circulation of excisable goods.

17. In order to apply the rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law to first 10 000 hectolitres of beer that have been produced in a independent small brewery in a calendar year and have been transported therefrom, a merchant that pays the excise duty shall attach a copy of the certificate to the declaration of excise duty.

18. The State Revenue Service shall cancel the issued certificate in the following cases:

18.1. the amount of beer produced by a brewery in the current calendar year exceeds 50 000 hectolitres;

18.2. the brewery does not conform to the requirements prescribed by these Regulations; or

18.3. an application of a merchant regarding cancellation of the certificate has been received.

19. The commission of the State Revenue Service upon evaluating the essence of the violation (its nature and potential influence on the State budget) may cancel the issued certificate in the following cases:

19.1. false information has been provided in the application for the receipt of the certificate; or

19.2. a merchant has violated the requirements of these Regulations.

20. A merchant within a time period of 10 working days after the receipt of the decision regarding cancellation of the certificate shall submit the original of the certificate to the State Revenue Service.

21. The decision of the commission of the State Revenue Service regarding the cancellation of the certificate comes into force on the day when a notification regarding the relevant decision is published in the newspaper Latvijas Vēstnesis [the official Gazette of the Government of the Republic of Latvia].

22. In the case referred to in Sub-paragraph 18.3 of these Regulations, the decision of the commission of the State Revenue Service regarding cancellation of the certificate comes into force on the next day after the taking of the decision, unless provided otherwise in the decision of the commission of the State Revenue Service. A notification regarding the cancellation of the certificate shall be published in the newspaper Latvijas Vēstnesis.

23. A merchant whose certificate has been cancelled (except for the case referred to in Sub-paragraph 18.3 of these Regulations) shall perform a recalculation of the excise duty and pay into the State budget the difference between the excise duty rate specified in Section 12, Paragraph one, Clause 1 of the Law and Section 12, Paragraph two, Clause 1 of the Law for the amount of beer produced in accordance with the certificate in question, which beer since the beginning of the relevant calendar year has been transported from the tax warehouse, attaching in accordance with Paragraph 14 of these Regulations the accompanying document of excisable goods referred to in Regulation No. 2719/92 or drawing up a strict accountability bill of lading-invoice in accordance with Paragraph 16 of these Regulations and to which the rate specified in Section 12, Paragraph two, Clause 1 of the Law is applied.

24. If the certificate issued is cancelled in accordance with Sub-paragraph 18.3 of these Regulations, the merchant whose certificate has been cancelled shall perform a recalculation of the excise duty and pay into the State budget the difference between the excise duty rate specified in Section 12, Paragraph one, Clause 1 of the Law and Section 12, Paragraph two, Clause 1 of the Law if the amount of beer produced in the brewery in the year of the certificate cancellation exceeds 50 000 hectolitres of beer. Recalculation shall be performed for the amount of beer produced in accordance with the certificate in question, which has been transported from the brewery since the beginning of the relevant calendar year, attaching in accordance with Paragraph 14 of these Regulations the accompanying document of excisable goods referred to in Regulation No. 2719/92 or drawing up a strict accountability bill of lading-invoice in accordance with Paragraph 16 of these Regulations and to which the rate specified in Section 12, Paragraph two, Clause 1 of the Law is applied.

III. Beer Produced in Independent Small Breweries of Other States

25. The rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law shall be applied to beer produced in other states if the document issued by the brewery and the translation thereof into the official language containing the following information has been attached to the accompanying document referred to in Regulation No. 2719/92 or Regulation No. 3649/92 or to the accompanying document drawn up in accordance with the regulatory enactments in the field of customs:

25.1. the name of the brewery and the state where the beer has been produced;

25.2. evidence that the relevant beer has been produced in a independent small brewery, which in the previous and the current calendar year produced the amount of beer that does not exceed 50 000 hectolitres of beer;

25.3. evidence that the relevant beer is from the first 10 000 hectolitres of beer produced in the independent small brewery in the relevant calendar year;

25.4. evidence that the brewery is legally and economically independent taking into account the provisions referred to in Paragraph 3 of these Regulations; and

25.5. the date and number of the relevant document, as well as the signature and full name of the responsible official.

26. A copy of the document referred to in Paragraph 25 of these Regulations shall be attached to the declaration of excise duty.

27. If the beer referred to in Paragraph 25 of these Regulations is being moved with a strict accountability bill of lading-invoice, the name of the brewery referred to in Paragraph 25 of these Regulations and the state where the beer has been produced, as well as the number and date of the document issued by the brewery shall be specified therein in addition to the information prescribed by the regulatory enactments regarding the drawing up of bills of lading-invoices and the circulation of excisable goods.

28. If the amount of beer imported into the Republic of Latvia from the relevant independent small brewery of another state exceeds 10 000 hectolitres per calendar year, the rate of excise duty specified in Section 12, Paragraph two, Clause 2 of the Law shall be applied to the amount of beer that exceeds 10 000 hectolitres.

29. If the State Revenue Service establishes that the amount of beer imported from the relevant brewery of another state (which has issued the document referred to in Paragraph 25 of these Regulations) exceeds 10 000 hectolitres per calendar year, the relevant payers of excise duty shall perform recalculation of the excise duty and pay into the State budget the difference between the excise duty rate specified in Section 12, Paragraph two, Clause 2 of the Law and Section 12, Paragraph two, Clause 1 of the Law for the amount that exceeds 10 000 hectolitres. The State Revenue Service shall inform the payer of excise duty regarding the amount of beer, for which the recalculation of excise duty shall be done.

30. If the State Revenue Service establishes that the amount of beer imported from the relevant brewery of another state (which has issued the document referred to in Paragraph 25 of these Regulations) exceeds 50 000 hectolitres per calendar year, the relevant payers of excise duty shall perform a recalculation of the excise duty and pay into the State budget the difference between the excise duty rate specified in Section 12, Paragraph one, Clause 1 of the Law and Section 12, Paragraph two, Clause 1 of the Law for the amount that has been imported into the Republic of Latvia and to which the rate of excise duty specified in Section 12, Paragraph two, Clause 1 of the Law is being applied. The State Revenue Service shall inform the payer of excise duty regarding the amount of beer, for which a recalculation of excise duty shall be performed.

IV. Closing Provision

31. These Regulations come into force on 1 January 2006.

Informative Reference to the European Union Directive

These Regulations contain legal norms arising from Council Directive 92/83/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages.

Prime Minister A. Kalvītis

Minister for Finance O. Spurdziņš

Annex 1
Cabinet Regulation No. 956
13 December 2005

State Revenue Service

Application
to receive the status of an independent small brewery

Information regarding the merchant

I certify that:

1. the brewery does not own 10 per cent or more of the equity capital or the amount of shares or stocks in another brewery;

2. another brewery does not have direct ownership of 10 per cent or more of the equity capital or the amount of shares or stocks in this brewery;

3. 10 per cent or more of the equity capital or the amount of shares or stocks in this brewery are not owned by another merchant, where, in its turn, 10 per cent or more of the equity capital or the amount of shares or stocks are owned by another brewery;

4. 10 per cent or more of the equity capital or the amount of shares or stocks in this brewery are not owned by a person or merchant, who, in his turn, owns 10 per cent or more of the equity capital or the amount of shares or stocks in another brewery;

5. the brewery does not produce beer in accordance with a franchise agreement, in compliance with which a franchiser (another brewery) has transferred to the other party of the agreement - franchisee - in exchange for direct or indirect financial consideration, the right to exploit the aggregate of intellectual property rights (especially - the firm name, the trademark, the shop sign, the design object, special professional information, know-how and the patents) for utilisation or marketing of goods;

6. also the members of the executive body of the brewery do not hold positions of members of an executive body in another brewery;

7. the amount of beer produced in the current calendar year will not exceed 50 000 hectolitres; and

8. the amount of beer produced in the previous calendar year does not exceed 50 000 hectolitres. *

Note.

* A note is made by the merchants that produced the beer in the previous calendar year.

Minister for Finance O. Spurdziņš

Annex 2
Cabinet Regulation No. 956
13 December 2005

(supplemented lesser State coat of arms)

State Revenue Service

Latvia, Riga

Certificate
on granting the status of an independent small brewery

It is hereby certified that this product has been produced in an independent small brewery with the amount of beer produced not exceeding 50 000 hectolitres per year

Note.

* Specified only in cases when a certificate has been re-registered. The latest date of the re-registration shall be specified.

Place for a seal

Minister for Finance O. Spurdziņš

Translation © 2007 Tulkošanas un terminoloģijas centrs (Translation and Terminology Centre)