The Saeima¹ has adopted and
the President has proclaimed the following Law:

Law on the Support Provided for Taxpayers for the Extinguishment of Late Payment Charge and Penalty

Section 1. Terms Used in this Law

(1) Terms used in this Law correspond to the terms used in the law On Taxes and Duties, unless specified otherwise by this Law.

(2) The following terms shall also be used in this Law:

1) support for the extinguishment of late payment charge and penalty (hereinafter - the support) - a one-off measure for extinguishing a late payment charge and penalty in relation to taxpayers who pay the principal debt for support by a specified date;

2) principal debt for support - a principal tax debt that:

a) in relation to a natural person, is determined in a division by tax types according to its status on the day when a support application is submitted;

b) in relation to a legal person, does not exceed the amount of the principal tax debt according to its status on 1 June 2017 and has not been paid by the day when a support application is submitted. As for that provided for in Section 4, Paragraph two of this Law: if the tax review (audit) or data conformity audit results in the calculation of additional tax payments for the taxpayer, the amount of the principal tax debt shall not exceed the total amount of the principal tax debt according to its status on 1 June 2017 and of the payments defined by a decision on the tax review (audit) or by the results of the data conformity audit.

Section 2. Purpose of this Law

The purpose of the Law is, upon implementing a one-off measure, to reduce the tax debt burden on taxpayers and increase the budget revenue.

Section 3. Support Objects

The support shall apply to the following tax types:

1) the personal income tax;

2) the enterprise income tax;

3) the value added tax;

4) the State social insurance mandatory contributions;

5) the excise duty;

6) the customs duty;

7) the natural resources tax;

8) the lotteries and gambling tax;

9) the electricity tax;

10) the micro-enterprise tax;

11) the vehicle operation tax;

12) the company car tax;

13) the subsidised electricity tax.

Section 4. Support Subjects

(1) A taxpayer who has principal debt for support of at least one of the tax types referred to in Section 3 of this Law may apply for support.

(2) Also a taxpayer who has been informed about the performance of a tax review (audit) or data conformity audit before the day of commencing such support may apply for support.

(3) A taxpayer shall have no right to apply for support if any of these conditions apply:

1) a decision on the suspension of economic activity of the taxpayer (or its unit where an infringement has taken place) has been taken in relation to the taxpayer;

2) the taxpayer has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register, except in the case when such exclusion from the State Revenue Service Value Added Tax Taxable Persons Register has been made based on the application of the taxpayer;

3) any of the officials of the taxpayer have been included in a list of persons of risk or the address of the taxpayer has been included in a list of risk addresses;

4) by its ruling a court has proclaimed insolvency proceedings in relation to the taxpayer.

(4) Support shall not be granted to a taxpayer regarding payment of the tax support measure that has been prescribed in accordance with the procedures laid down in the Law on the Tax Support Measure and whereon the State Revenue Service has taken a decision on the application of the tax support measure in relation to the taxes, and the execution of such decision is still controlled by the State Revenue Service.

(5) If extrajudicial legal protection proceedings have been proclaimed or legal protection proceedings have been initiated for a taxpayer, it shall be allowed to apply for support insofar as it is not in contradiction with the regulation laid down in laws and regulations governing insolvency, except in the case when participation in support provides the taxpayer with more favourable conditions and such conditions do not restrict the rights of other creditors beyond that which is necessary for successful implementation of a plan of measures of the legal protection proceedings.

Section 5. Administration of Support

(1) Support shall be administered by the State Revenue Service.

(2) To apply for support, a taxpayer shall submit a support application to the State Revenue Service.

(3) After examining the application referred to in Paragraph two of this Section, the State Revenue Service shall take one of the following decisions:

1) a decision on the application of support;

2) a decision on refusal to apply support.

(4) The State Revenue Service shall take the decision referred to in Paragraph three of this Section within 21 days from the day when the support application has been received.

(5) The decision on the application of support shall enter into effect on the date of taking thereof.

(6) Should the taxpayer submit an adjusted tax declaration to the State Revenue Service regarding the tax whose payment term has set in before the day of determining the principal debt for support, the term laid down in Paragraph four of this Section shall be extended by the number of days for implementation of the tax administration measures laid down in the tax laws and regulations.

(7) In the decision on the application of support the State Revenue Service shall indicate the following information divided by tax types:

1) principal debt for support;

2) late payment charge related to the principal debt for support;

3) penalty, if any is calculated, related to the principal debt for support;

4) payment terms of the principal debt for support.

(8) Decision on extension of the payment term or on voluntary execution of late tax payments whereby the payment term for the tax payment was extended in accordance with the procedures laid down in Section 24 or Section 26, Paragraph eleven of the law On Taxes and Duties shall lose force in its non-executed part starting from the day when the decision on the application of support is taken. A settlement agreement concluded by the State Revenue Service and taxpayer in accordance with the regulation laid down in Section 41 of the law On Taxes and Duties shall lose force in its non-executed part starting from the day when the decision on the application of support is taken.

(9) Should the settlement agreement lose force in its non-executed part starting from the day when the decision on the application of support is taken, the consent expressed by the taxpayer in the settlement agreement to terminate a legal dispute regarding additionally assessed payments payable into the budget as a result of the tax review (audit) or regarding unfounded increasing of the refunds repayable from the budget shall remain effective.

Section 6. The Day of Commencing and Completing the Support

(1) The support shall commence on 1 October 2017.

(2) The State Revenue Service shall perform the following activities:

1) inform a taxpayer about support for the extinguishment of late payment charge and penalty;

2) provide consultations to a taxpayer about preparation of a support application and support procedures.

(3) The taxpayer shall have the right to submit the support application within three months after the date specified in Paragraph one of this Section.

(4) Should the taxpayer be informed about the performance of a tax review (audit) or data conformity audit before the day of commencing the support, the day of commencing the support for such taxpayer shall be the next day after the tax administration has announced the decision regarding the results of the tax review (audit) or data conformity audit. Should the payment term for the tax payment calculated for the taxpayer in the decision on the results of the tax review (audit) or data conformity audit set in before 25 December 2017, the support application shall be submitted in accordance with the condition for the submission of application specified in Paragraph three of this Section.

(5) The Cabinet shall determine the standard form of support application, as well as the procedures for payment of the principal debt for support to be performed within the framework of support.

(6) The payment term of the principal debt for support specified in the State Revenue Service's decision on the application of support cannot be after 31 December 2019.

Section 7. Adjustments to Declarations

(1) Within three months from the date of commencing the support and before the support application is submitted to the State Revenue Service, a taxpayer shall have the right to make adjustments in the tax declarations where the term for the tax payment is before the date of determining the principal debt for support, taking into account the restriction laid down in Section 16, Clause 6 of the law On Taxes and Duties. State social insurance mandatory contributions shall be adjusted in accordance with the procedures laid down in the law On State Social Insurance.

(2) After the support application has been submitted to the State Revenue Service, the taxpayer shall have no right to submit declaration adjustments in relation to the principal debt for support.

Section 8. Extension of Payment Term of Principal Debt for Support

(1) A taxpayer has the right to request extension of the payment term of the principal debt for support in a support application.

(2) Within the framework of support, the State Revenue Service has the right to extend the payment term according to the following restrictions:

1) the principal debt for support is to be divided into equal parts and paid once a month;

2) the payment term of the principal debt for support may be extended for up to 24 months;

3) a monthly payment of the principal debt for support is at least four percent of the debt's total sum for each of the tax types referred to in Section 3 of this Law but not less than EUR 100 for a legal person and EUR 15 for a private person of the total amount of the principal debt for support.

(3) The late payment charges provided for in Section 29, Paragraph two of the law On Taxes and Duties shall not be applied to the principal tax debt the payment term of which has been extended within the framework of support.

Section 9. Payments to Be Performed within the Framework of Support

(1) A taxpayer, in accordance with the State Revenue Service's decision on the application of support, shall pay the principal debt for support in accordance with the procedures laid down in Section 23.¹ of the law On Taxes and Duties.

(2) Should the taxpayer fail to perform two consecutive payments within the term and in the amount provided for in the decision on the application of support or fail to perform the current tax payments within the terms provided for in tax laws, or fail to perform the tax payments whose payment term has been extended under the procedures laid down in Section 24 and Section 26, Paragraph eleven of the law On Taxes and Duties, or fail to perform other payments to the State budget with an effective due date:

1) the State Revenue Service shall cancel the decision on the application of support;

2) the late payment charge shall be restored in full amount for a residue of the principal debt for support starting from the day when the decision on the application of support is made;

3) the penalty, if any is calculated, shall be kept in full amount.

Section 10. Extinguishing of Late Payment Charge and Penalty

Should the taxpayer pay the principal debt for support, the State Revenue Service shall, within 21 days starting from the day when the principal debt for support has been paid in full, take a decision to extinguish the late payment charge in relation to the principal debt for support and extinguish the penalty, if any is calculated, in relation to the principal debt for support.

Section 11. Recovery of Late Tax Payments

(1) A taxpayer to whom the recovery of late tax payments has been initiated in accordance with the procedures laid down in the law On Taxes and Duties shall have the right to apply for support. The taxpayer shall cover the costs of execution of the decision on the recovery of the late tax payments.

(2) If the principal debt for support, associated late payment charge and penalty are transferred to a bailiff for recovery, upon receipt of a support application from the taxpayer, the State Revenue Service shall send a request to the sworn bailiff for him or her to provide information on whether the taxpayer has covered the costs of execution of the decision on the recovery of late tax payments.

(3) If the taxpayer has not covered the costs of execution of the recovery referred to in Paragraph one of this Section, the State Revenue Service shall take a decision to refuse to apply support.

(4) During the period of support, enforcement proceedings for recovery of the late tax payment shall not be initiated, but the already started proceedings in relation to the tax debts whereon the State Revenue Service has taken a decision to apply support shall be suspended. Should this be the case, the decision enforcement measures of the tax administration referred to in Section 26.¹ of the law On Taxes and Duties shall be preserved.

(5) If the decision on the application of support has lost its effect, the late tax payments shall be recovered in accordance with the procedures laid down in the law On Taxes and Duties.

Section 12. Contesting and Appealing of Decisions of the State Revenue Service

(1) A decision of an official of the State Revenue Service taken within the framework of support may be contested by submitting an application to the Director General of the State Revenue Service within the time period laid down in Part D of the Administrative Procedure Law for the submission of a claim regarding compulsory execution actions.

(2) Decision of the Director General of the State Revenue Service may be appealed in a court within the time period laid down in Part D of the Administrative Procedure Law for the submission of a claim regarding compulsory execution actions.

(3) The obligation of provision of evidence referred to in Section 38 of the law On Taxes and Duties shall be applied to a decision of an official of the State Revenue Service taken within the framework of support.

This Law has been adopted by the Saeima on 27 July 2017.

Acting for the President,
The Chairperson of the Saeima, I. Mūrniece

Riga, 8 August 2017

 

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¹ The Parliament of the Republic of Latvia

Translation © 2018 Valsts valodas centrs (State Language Centre)