Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
22 May 2003 [shall come
into force from 20 June 2003];
31 March 2004 [shall come into force from 1 May
2004];
20 January 2005 [shall come into force from 16 February
2005];
19 December 2006 [shall come into force from 1 January
2006];
5 May 2011 [shall come into force from 8 June
2011];
4 April 2013 [shall come into force from 9 May
2013];
12 September 2013 [shall come into force from 1 January
2014];
3 July 2014 [shall come into force from 11 July
2014];
16 June 2016 [shall come into force from 15 July
2016];
1 March 2018 [shall come into force from 7 March
2018];
14 May 2020 [shall come into force from 11 June
2020];
13 May 2021 [shall come into force from 8 June
2021];
3 March 2022 [shall come into force from 5 March
2022];
7 December 2023 [shall come into force from 1 March
2024];
29 February 2024 [shall come into force from 7 March
2024].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
|
The Saeima 1 has adopted and
the President has proclaimed the following law:
On the Application of Taxes in
Free Ports and Special Economic Zones
Chapter I
General Provisions
Section 1. Terms Used in this
Law
(1) Terms used in The Free Port of Riga Law, the Free Port of
Ventspils Law, the Law on the Latgale Special Economic Zone, the
Law on the Liepāja Special Economic Zone and the Law on the
Rēzekne Special Economic Zone, the Law on Control of Aid for
Commercial Activity, the law On Taxes and Fees, the Value Added
Tax Law and the Enterprise Income Tax Law and also terms used in
the laws and regulations governing customs matters are the terms
used in this Law, unless otherwise provided for in this Law.
(2) The following terms shall also be used in this Law:
1) permit to apply the direct tax reliefs:
a) a certificate issued by the Liepāja Special Economic Zone
Authority to a capital company of the special economic zone on
the right to apply the direct tax reliefs;
b) a permit issued by the Rēzekne Special Economic Zone
Authority to a capital company of the special economic zone for
the right to apply the direct tax reliefs;
c) a certificate issued to a capital company licensed by the
Free Port of Ventspils Authority on the right to apply the direct
tax reliefs,
d) a certificate issued to a capital company licensed by the
Free Port of Riga Authority on the right to apply the direct tax
reliefs;
e) a permit issued by the Latgale Special Economic Zone
Authority to a capital company of the special economic zone for
the right to apply the direct tax reliefs;
2) free port authority - the Free Port of Riga
Authority or Free Port of Ventspils Authority;
21) commencement of works - start of works
within the meaning of Article 2(23) of Commission Regulation (EU)
No 651/2014 of 17 June 2014 declaring certain categories of aid
compatible with the internal market in application of Articles
107 and 108 of the Treaty (hereinafter - Commission Regulation No
651/2014);
22) completion of investments - the moment
when a zone authority or free port authority gives its opinion on
the completion of investments on the basis of the certification
on the completion of the investment submitted by a zone capital
company or a licensed capital company and accompanied by
documents certifying the completion of the investment;
3) licensed capital company - a capital company which
has concluded a contract with the free port authority for
licensed commercial activities in the territory of the Free Port
of Riga or the Free Port of Ventspils;
4) indirect taxes - the customs duty, natural resources
tax, excise duty and value added tax;
41) estimated wage costs - the costs arising
from the initial investments defined in Clause 12 of this
Paragraph for newly created workplaces in the Latgale Special
Economic Zone, the Rēzekne Special Economic Zone, and the Liepāja
Special Economic Zone which meet the following conditions:
a) they have been laid down in the contract for the settlement
of the estimated wage costs concluded by and between a zone
authority and a capital company;
b) they comprise gross wage before the payment of taxes and
are calculated for a period of two years by comprising the
mandatory State social insurance contributions of the
employer;
c) the investment project creates a net increase in the number
of employees within the meaning of Article 2(32) of Commission
Regulation No 651/2014 compared with the average over the
previous 12 months, determined by applying Article 14(9)(a) of
Commission Regulation No 651/2014, meaning that any workplace
lost shall be deducted from the created number of workplaces
during that period;
d) a capital company ensures, not later than within three
years after completion of the initial investments, each workplace
with an employee whose declared place of residence is located in
the Latgale planning region in respect of the capital companies
of the Latgale Special Economic Zone and the Rēzekne Special
Economic Zone, but in respect of the capital companies in the
Liepāja Special Economic Zone - in Liepāja local government,
Dienvidkurzeme municipality, or Alsunga rural territory of
Kuldīga municipality included in the Kurzeme planning region;
e) each workplace is retained for at least five years in a
large capital company, whereas in small or medium-sized capital
companies - for at least three years from the day when the
relevant workplace was ensured for the first time, except when a
workplace has been lost during the period from 1 January 2020 to
30 June 2021;
42) the same or a similar activity - an
activity within the meaning of Article 2(50) of Commission
Regulation No 651/2014;
5) direct taxes - the enterprise income tax and
immovable property tax;
6) accumulated sum of eligible costs:
a) the sum of all the initial investments by a zone capital
company or licensed capital company which are made from the
taxation period in which the relevant capital company has
concluded a contract with a zone authority or free port authority
for the making of investments in the territory of the zone or
free port up to the taxation period (inclusive) for which the
calculation is made - for a capital company of the Liepāja
Special Economic Zone, a capital company of the Rēzekne Special
Economic Zone, a capital company of the Latgale Special Economic
Zone, a capital company licensed by the Free Port of Rīga, or a
capital company licensed by the Free Port of Ventspils;
b) the amount of all estimated wage costs of a zone capital
company that are settled from the taxation period in which the
relevant capital company has concluded a contract with a zone
authority for the settlement of the estimated wage costs in the
territory of the zone up to the taxation period (inclusive) for
which the calculation is made - for a capital company of the
Rēzekne Special Economic Zone, a capital company of the Latgale
Special Economic Zone, or a capital companyof the Liepāja Special
Economic Zone;
7) accumulated sum of direct tax rebates - the sum of
all direct tax rebates used in accordance with this Law
commencing from the taxation period in which a zone capital
company or licensed capital company has been issued with the
permit to apply the direct tax reliefs up to the taxation period
(not inclusive) for which the calculation is made;
8) zone authority - the Liepāja Special Economic Zone
Authority, the Rēzekne Special Economic Zone Authority, and the
Latgale Special Economic Zone Authority;
9) territory of a zone - the territory of the special
economic zone as laid down in accordance with the Law on the
Liepāja Special Economic Zone, Law on the Rēzekne Special
Economic Zone, or Law on the Latgale Special Economic Zone;
10) territory of a free port - the territory of a free
port laid down in the Free Port of Ventspils Law or The Free Port
of Rīga Law;
11) zone capital company - a capital company of the
Liepāja Special Economic Zone with which the zone authority has
concluded a contract for the performance of commercial activities
and the making of investments or the settlement of the estimated
wage costs in the territory of the Liepāja Special Economic Zone,
a capital company of the Rēzekne Special Economic Zone with which
the zone authority has concluded a contract for the performance
of commercial activities and the making of investments or the
settlement of the estimated wage costs in the territory of the
Rēzekne Special Economic Zone, and a capital company of the
Latgale Special Economic Zone which performs commercial
activities in the territory of the Latgale Special Economic Zone
and has concluded a contract with the zone authority for the
making of investments or the settlement of the estimated wage
costs in the territory of the zone;
12) investments made by a zone capital company or a
licensed capital company - the long-term tangible investments
(buildings, structures, equipment, including the costs of energy
generating equipment, and machinery) and intangible investments
(costs of the acquisition of patents and technology and the
acquisition costs of information technology software) in the
fixed assets of a zone capital company or licensed capital
company, and also a zone authority or a free port authority which
conform to the following conditions:
a) are provided for in the contract concluded between the zone
authority and the zone capital company or the port authority and
the licensed capital company for the making of investments;
b) are qualified as initial investments, i.e. one or several
of the following investments - investments in the establishment
of a new capital company, in the increase of the production or
service capacity of an existing capital company, in the
diversification of the products of an existing capital company
with products which have not been previously produced by the
capital company, or in a fundamental change of production
processes and general service provision of an existing capital
company with respect to a product or service related to the
investment in the capital company. A replacement investment shall
not be qualified as an initial investment;
c) the acquired assets, including the assets acquired under
financial lease in accordance with the conditions of Article
14(6)(b) of Commission Regulation No 651/2014, are new, except in
the case of acquisition by a capital company that conforms to the
status of a small or medium-sized capital company as defined in
Annex I to Commission Regulation No 651/2014;
d) intangible assets and the costs thereof conform to the
requirements laid down in Article 14(8) of Commission Regulation
No 651/2014;
e) after completion, the investments made remain in the zone
or free port for at least five years or three years, if the
investments are made by a capital company that conforms to the
status of a small or medium-sized capital company laid down in
Annex I to Commission Regulation No 651/2014. The replacement or
substitution of obsolete or defective equipment with new
equipment is not prohibited if the economic activity continues to
take place in the respective territory for at least five years or
three years if the capital company conforms to the status of a
small or medium-sized capital company;
f) the assets related to the modernisation process conform to
the requirements laid down in Article 14(7) of Commission
Regulation No 651/2014;
13) [3 July 2014].
[22 May 2003; 31 March 2004; 20 January 2005; 19 December
2006; 5 May 2011; 4 April 2013; 3 July 2014; 16 June 2016; 1
March 2018; 14 May 2020; 13 May 2021; 3 March 2022; 29 February
2024]
Section 2. Purpose of this Law
This Law prescribes the procedures for the application of:
1) indirect taxes in the Free Port of Riga, the Free Port of
Ventspils, the Latgale Special Economic Zone, the Liepāja Special
Economic Zone, and the Rēzekne Special Economic Zone;
2) direct tax reliefs in the Latgale Special Economic Zone,
the Liepāja Special Economic Zone, the Rēzekne Special Economic
Zone, the Free Port of Ventspils, and the Free Port of Riga.
[3 July 2014; 16 June 2022]
Section 2.1 Application
of Tax Laws
(1) Unless otherwise provided for by this Law, zone capital
companies, licensed capital companies, zone authorities and port
authorities shall apply, calculate, declare and pay taxes and
also perform other activities necessary for ensuring the correct
payment of taxes in accordance with tax laws and the laws and
regulations in the field of customs matters.
(2) The tax reliefs provided for in this Law shall not be
applied to a zone capital company and a licensed capital company
the owner or holder of more than 25 per cent of the capital
shares (stocks) of which is located, set up, or established in a
low-tax or tax-free country or territory. A low-tax or tax-free
country or territory shall be determined in accordance with the
Enterprise Income Tax Law.
[22 May 2003; 31 March 2004; 19 December 2006; 13 May
2021 / See Paragraph 20 of Transitional
Provisions]
Chapter II
Application of Indirect Taxes
Section 3. Application of Indirect
Taxes to Supply of Goods and Services
(1) Goods which are not intended for further export and which
are supplied to a licensed capital company, zone capital company,
zone authority, or free port authority by a registered payer of
value added tax shall be taxable with the standard rate or
reduced rate of value added tax in accordance with the Value
Added Tax Law unless otherwise provided for in this Section.
(2) The following shall be subject to zero per cent rate of
value added tax:
1) supply of goods to a licensed capital company, zone capital
company, zone authority, or free port authority in the free zone
within the territory of a free port or special economic zone
(hereinafter - the free zone) by a registered payer of value
added tax for further export;
2) supply of such goods to a licensed capital company, zone
capital company, zone authority, or free port authority which
conform to the requirements laid down in Section 1, Paragraph
two, Clause 12 of this Law;
3) [20 January 2005];
4) [20 January 2005];
5) [20 January 2005].
(3) If the goods referred to in Paragraph two, Clause 1 of
this Section are sold, they shall be taxable with the standard
rate or reduced rate of value added tax in accordance with the
Value Added Tax Law.
(4) If a licensed capital company, zone capital company, zone
authority, or free port authority supplies the goods referred to
in Paragraph two, Clause 2 of this Section to another person
earlier than five years from the moment of its acquisition, the
licensed capital company, zone capital company, zone authority,
or free port authority shall calculate value added tax from the
initial value and pay such tax into the State budget in the
taxation period when the goods were supplied and this tax may not
be deducted as the input tax.
(5) [20 January 2005]
(6) [20 January 2005]
(7) Oil products which are supplied to a licensed capital
company, zone capital company, zone authority, or free port
authority shall be exempt from excise duty while the they are in
the territory of the free zone of the licensed capital company,
zone capital company, zone authority, or free port authority.
(8) Oil products shall be exempt from excise duty when these
products are used by a licensed capital company, zone capital
company, zone authority, or free port authority:
1) in ships and other watercrafts which are not used for
leisure and recreational needs;
2) in ships for their manufacture, testing, and maintenance
needs;
3) in ships and other watercrafts which are used for works of
excavation and enlargement of waterways;
4) for electricity generation or in combined equipment
generating electricity and thermal energy.
(81) If diesel fuel, kerosene, or fuel oil the
colorimetric index of which is less than 2.0 and the kinematic
viscosity at 50oC is less than 25 cSt or the
substitute products and components of such petroleum products is
used in the cases referred to in Paragraph eight of this Section,
then the relevant oil products shall be exempt from excise duty
if they are labelled (marked) in accordance with the requirements
of the law On Excise Duties.
(9) The rate specified in Section 14, Paragraph 2.3
of the law On Excise Duties shall be applied to the oil products
(also if biodiesel fuel completely acquired from biomass or
paraffin-enriched diesel fuel acquired from biomass is added to
it) referred to in Section 14, Paragraph one, Clauses 3, 4, and 6
of the law On Excise Duties which are labelled (marked) in
accordance with the requirements of the law On Excise Duties and
which are used by a licensed capital company, zone capital
company, zone authority, or free port authority in the territory
of the free zone or in the territory of the free port for:
1) stationary installations;
2) cranes and other similar objects;
3) equipment which is used in construction works in the
territory of the free zone or in the territory of the free
port;
4) machines which structurally are not intended for
participation in traffic on public roads.
(10) The Cabinet shall determine conditions for the
circulation and control of those oil products which are subject
to exemptions and reliefs from excise duty in accordance with
Paragraphs seven, eight, 8.1 and nine of this Section,
and also the conditions for the registration of the users of such
oil products.
[22 May 2003; 31 March 2004; 20 January 2005; 19 December
2006; 5 May 2011; 4 April 2013; 7 December 2023 / See
Paragraph 23 of Transitional Provisions]
Section 4. Restrictions on Retail
Trade
(1) In the territory of the free zone of licensed capital
companies and zone capital companies, the supply of goods and
provision of services to natural persons (hereinafter - the
retail trade) is prohibited, except for:
1) the supply of food and medical goods;
2) public catering, medical, communications and financial
transactions;
3) trade in duty-free shops which have been established in
accordance with the Customs Law and operate in accordance with
the procedures stipulated by the Cabinet.
(2) The retail goods supplied and services provided in the
territory of the free zone of a licensed capital company and zone
capital company which have been referred to in Paragraph one,
Clauses 1 and 2 of this Section shall be taxable with the
standard rate or reduced rate of value added tax in accordance
with the Value Added Tax Law, except those goods and services
which are exempt from value added tax in accordance with the
Value Added Tax Law.
(3) The goods referred to in Paragraph one, Clause 1 of this
Section may be supplied and the services referred to in Paragraph
one, Clause 2 of this Section may be supplied to natural persons
only by those licensed capital companies or zone capital
companies which have concluded a contract for retail trade in the
territory of the zone or the territory of the free port with a
zone authority or a free port authority. The premises and other
territories intended for retail trade, as well as storage of
relevant goods shall be indicated in the contract.
[22 May 2003; 31 March 2004; 19 December 2006; 5 May 2011;
4 April 2013]
Chapter III
Application of Direct Tax Reliefs
[3 July 2014 / Amendments
shall come into force on 1 September 2014. See Paragraph
17 of Transitional Provisions]
Section 5. Permit to Apply the
Direct Tax Reliefs
(1) The permit to apply the direct tax reliefs shall be
granted by a zone authority or free port authority in accordance
with the procedures specified by the Law.
(2) The permit to apply the direct tax reliefs may be granted
to a zone capital company or licensed capital company which
conforms to both of the following conditions:
1) is located in the territory of a special economic zone or
free port;
2) performs commercial activities only in the territory of a
special economic zone or free port. The permit to apply the
direct tax reliefs in the Latgale Special Economic Zone may be
granted to a capital company which performs commercial activities
in the territory of the Latgale Special Economic Zone or outside
of the territory of the Latgale Special Economic Zone by
conforming with the following conditions:
a) the location of the implementation of an investment project
planned by the capital company is in the territory of the Latgale
Special Economic Zone;
b) if the capital company has several units, it shall clearly
separate the financial flow between the territories of activity
in the Latgale Special Economic Zone for which the permit to
apply the direct tax reliefs has been granted to the capital
company and the territories of activity for which the permit to
apply the direct tax reliefs has not been granted to it, and
which are not included in the territory of the Latgale Special
Economic Zone;
c) the capital company establishes a separated financial flow
in respect of the activity that is performed in sectors to be
supported in the territory of the Latgale Special Economic Zone
and other units outside of the territory of the Latgale Special
Economic Zone;
3) the following shall not be considered to be commercial
activity outside of the territory of a special economic zone or
free port:
a) the administrative body or representation office of a zone
capital company or licensed capital company is located outside of
the territory of a special economic zone or free port;
b) negotiations and the conclusion of contracts take place
outside of the territory of a special economic zone or free
port;
c) the transit of goods from or to the territory of a special
economic zone or free port;
d) other activities which do not have the nature of the
execution of a goods-money (also clearing) transaction.
(21) The permit to apply the direct tax reliefs may
be granted to a capital company of the Rēzekne Special Economic
Zone, a capital company of the Latgale Special Economic Zone, and
a capital company of the Liepāja Special Economic Zone which meet
the conditions of Paragraph two of this Section and which have
chosen the type of eligible costs referred to in Section 1,
Paragraph two, Clause 6, Sub-clause "a" or "b" of this Law.
(3) The permit to apply the direct tax reliefs shall no longer
be in effect if at least one of the following conditions
exists:
1) the term of operation of the special economic zone has
expired or the free port has been abolished;
2) the term of validity of such permit has expired;
3) the zone authority or free port authority and the zone or
licensed capital company agree to terminate the contract for the
performance of commercial activities in the territory of the zone
or free port;
31) the Latgale Special Economic Zone Authority and
a capital company of the Latgale Special Economic Zone agree to
revoke the contract for making investments or the settlement of
the estimated wage costs;
4) a court gives the ruling to terminate the contract between
a zone or free port authority and a zone or licensed capital
company for the performance of commercial activities in the
territory of the zone or free port and to cancel the permit
issued to the capital company to apply the direct tax
reliefs;
41) a court gives the ruling to revoke the contract
between the Latgale Special Economic Zone Authority and a capital
company of the Latgale Special Economic Zone for making
investments or the settlement of the estimated wage costs and to
cancel the permit issued to the capital company to apply the
direct tax reliefs;
5) the zone capital company or the licensed capital company is
liquidated or reorganised, as well as commercial activity is
terminated as laid down in other cases by law;
6) the applicable maximum sum of direct tax rebates determined
in contracts concluded for making investments or the settlement
of the estimated wage costs has been reached in relation to the
accumulated sum of eligible costs.
(4) The permit to apply the direct tax reliefs in respect of
that specified in Section 1, Paragraph two, Clause 12 of this Law
shall not be granted by a zone authority or free port authority
to the following capital companies:
1) the capital companies of the transport sector referred to
in Article 2(45) of Commission Regulation No 651/2014 and related
transport infrastructure as defined in Article 13(b) of
Commission Regulation No 651/2014;
2) the capital companies of the steel sector referred to in
Article 2(43) of Commission Regulation No 651/2014 as defined in
Article 13(a) of Commission Regulation No 651/2014;
3) [29 February 2024];
4) the capital companies of the agriculture sector referred to
in Article 2(8)(9)(10) and (11) of Commission Regulation No
651/2014 as defined in Article 1(3)(b) and (c) of Commission
Regulation No 651/2014;
5) the capital companies of the fishery and aquaculture sector
referred to in Article 1(3)(a) of Commission Regulation No
651/2014;
6) the capital companies of the coal sector referred to in
Article 2(13) of Commission Regulation No 651/2014 as defined in
Article 13(a) of Commission Regulation No 651/2014;
61) the capital companies of the lignite sector
referred to in point (a) of Article 2(43) of Commission
Regulation No 651/2014 as defined in Article 13(a) of Commission
Regulation No 651/2014;
7) [29 February 2024];
8) the capital companies in the energy generation, storage,
transmission, and distribution sectors referred to in Article
13(b) of Commission Regulation No 651/2014 and energy
infrastructure referred to in Article 2(130) of Commission
Regulation No 651/2014, with the exception of zone capital
companies or licensed capital companies which have included the
cost of energy generating equipment in the calculation of the
investment costs and meet all of the following conditions:
a) the principal objective of the project is not focused on
energy generation and trade;
b) initial investments in energy generating equipment are
planned in a smaller amount in respect of all initial investments
to be made within the scope of the project. The costs of energy
generating equipment are eligible in the amount not exceeding 30
per cent of the total investment value in the project;
c) energy has been generated for own consumption of a zone
capital company or a licensed capital company, and energy
generation capacity must be adjusted for ensuring the production
or services of a zone capital company or a licensed capital
company;
d) the investments are attributable to renewable energy
sources or high-efficiency cogeneration;
9) the capital companies of the broadband sector referred to
in Article 13(b) of Commission Regulation No 651/2014.
(41) The permit to apply the direct tax reliefs in
respect of that specified in Section 1, Paragraph two, Clauses
4.1 and 12 of this Law shall not be granted by the
Latgale Special Economic Zone Authority, in addition to the
provisions of Paragraph four of this Section, to capital
companies implementing the investment project in the following
sectors:
1) growing of tobacco (NACE Code: A01.15);
2) manufacture of beverages (NACE Code: C11), except for the
manufacture of soft drinks; production of mineral waters and
other bottled waters (NACE Code: 11.07);
3) manufacture of tobacco products (NACE Code: C12);
4) retail trade (NACE Code: G), except for the retail trade of
the manufactured products in the territories of the Latgale
Special Economic Zone;
5) financial and insurance activities (NACE Code: K);
6) gambling and betting activities (NACE Code: R92);
7) other personal service activities (NACE Code: S96).
(42) The permit to apply the direct tax reliefs in
respect of that specified in Section 1, Paragraph two, Clause
4.1 of this Law shall not be granted by the Rēzekne
Special Economic Zone Authority, in addition to the provisions of
Paragraph four of this Section, to capital companies implementing
the investment project in the following sectors:
1) growing of tobacco (NACE Code: A01.15);
2) manufacture of beverages (NACE Code: C11), except for the
manufacture of soft drinks; production of mineral waters and
other bottled waters (NACE Code: 11.07);
3) manufacture of tobacco products (NACE Code: C12);
4) retail trade (NACE Code: G), except for the retail trade of
the manufactured products in the territories of the Rēzekne
Special Economic Zone;
5) financial and insurance activities (NACE Code: K);
6) gambling and betting activities (NACE Code: R92);
7) other personal service activities (NACE Code: S96).
(43) The permit to apply the direct tax reliefs in
respect of that specified in Section 1, Paragraph two, Clauses
4.1 and 12 of this Law shall not be granted by the
Liepāja Special Economic Zone Authority, in addition to the
provisions of Paragraph four of this Section, to capital
companies implementing the investment project in the following
sectors:
1) growing of tobacco (NACE Code: A01.15);
2) manufacture of beverages (NACE Code: C11), except for the
manufacture of soft drinks; production of mineral waters and
other bottled waters (NACE Code: 11.07);
3) manufacture of tobacco products (NACE Code: C12);
4) retail trade (NACE Code: G), except for the retail trade of
the manufactured products in the territories of the Liepāja
Special Economic Zone;
5) financial and insurance activities (NACE Code: K);
6) gambling and betting activities (NACE Code: R92);
7) other personal service activities (NACE Code: S96).
(5) If a capital company is operating in both of the sectors
referred to in Paragraphs four, 4.1, and
4.2 of this Section and in other sectors, a zone
authority or free port authority shall grant the permit to apply
the direct tax reliefs if the capital company clearly separates
the financial flows for the implementation of a project in the
sector to be supported from the financial flow of other
operational sectors during investing and throughout the period of
application of tax reliefs until the maximum applicable amount of
direct tax rebates in relation to the accumulated sum of eligible
costs is reached. Within the meaning of this Law, financial flow
is the flow of the expenditures and revenues of economic
transactions where the revenues and expenditures in the sector to
be supported of the principal activity, investment activity, and
financing activity of a zone capital company or a licensed
capital company are separated from the revenues and expenditures
of a capital company of other operational sectors.
(6) When applying the direct tax reliefs, a zone authority or
free port authority shall not grant the permit if:
1) the conditions of Article 1(2)(c) and (d) and (4)(a) and
(c) of Commission Regulation No 651/2014 are fulfilled;
2) a capital company has not provided any certification
stating that within the past two years before the submission of
the application for the conclusion of a contract for making
investments, except for the period from 1 January 2020 until 30
June 2021, it has not carried out relocation as defined in point
(a) of Article 2(61) of Commission Regulation No 651/2014
(hereinafter - the relocation) to the respective territory of the
zone or free port where the initial investment for which aid is
requested shall be made and undertakes not to do so for two years
after completion of the initial investment for which aid is
requested.
[22 May 2003; 31 March 2004; 19 December 2006; 3 July 2014;
16 June 2016; 1 March 2018; 14 May 2020; 13 May 2021; 3 March
2022; 29 February 2024]
Section 5.1 Right to
Apply the Direct Tax Reliefs
(1) The permit issued by a zone authority or a free port
authority shall certify the right to receive the direct tax
reliefs laid down in this Law, but the contract concluded for
making investments or the settlement of the estimated wage costs
shall determine the conditions for the application of direct tax
reliefs to the investments provided for in the particular
contract for making investments or the coverage of the estimated
wage costs for the estimated wage costs.
(2) A contract for making investments is an agreement
concluded between a capital company and the free port authority
or zone authority for making investments in the free port or
special economic zone. The contract shall include at least the
following information:
1) the name of the investment project;
2) investment objects and investment amount;
3) the time limit for investments which does not exceed five
years from the conclusion of the contract;
4) the aid percentage applicable to the investment which is in
effect on the day of concluding the contract, in addition taking
into account the provisions of Sections 8.1 and
8.2 of this Law for determining the aid
percentage;
5) certification of the capital company that it will ensure
the financial investment in the amount of at least 25 per cent
from the total investment project costs provided for in the
contract for making investments for which State aid has not been
received, that is, financing in the amount of at least 25 per
cent from own economic resources or external financial resources
for which no public aid has been received, including State or
local government guarantee or State or local government loan with
preferential conditions has not been received;
6) the maximum applicable sum of direct tax rebates for the
investments provided for in the contract;
7) application of the aid percentage determined in the
contract until the moment when the maximum applicable sum of
direct tax rebates laid down in the contract for making
investments in relation to the accumulated sum of eligible costs
is reached;
8) application of the aid percentage determined in the
contract to the enterprise income tax reliefs and immovable
property tax rebates laid down in this Law.
(21) The contract for the settlement of the
estimated wage costs is an agreement concluded between a zone
capital company and a zone authority for the settlement of the
estimated wage costs in a special economic zone. At least the
following information shall be included in the contract:
1) the name of the investment project;
2) investment objects and the amount of initial
investments;
3) the planned number of newly created workplaces;
4) the amount of estimated wage costs;
5) the aid percentage applicable to the estimated wage costs
which is in effect on the day of concluding the contract for the
settlement of the estimated wage costs, in addition taking into
account the provisions of Section 8, Paragraphs one and two,
Section 8.1, and Section 8.2, Paragraph
four of this Law;
6) the certification of a zone capital company that the
investment project will create a net increase in the number of
employees within the meaning of Article 2(32) of Commission
Regulation No 651/2014 compared with the average over the
previous 12 months and that the capital company will provide the
workplace within three years after completion of the initial
investment, taking into account that in accordance with Article
14(9) of Commission Regulation No 651/2014 the number of
workplaces lost during the period shall be deducted from the
number of workplaces created, expressed in annual work units. The
declared place of residence of an employee in relation to a
capital company of the Rēzekne Special Economic Zone and the
Latgale Special Economic Zone is in the Latgale planning region,
and in relation to a capital company of the Liepāja Special
Economic Zone - in the local government of Liepāja State city,
Dienvidkurzeme municipality or Alsunga rural territory of Kuldīga
municipality that are part of the Kurzeme planning region, and
the workplace will be secured for at least five years in a large
capital company and for at least three years in a small or
medium-sized capital company from the day on which the workplace
was first ensured;
7) the certification of a zone capital company that it would
ensure the financial investment in the amount of at least 25 per
cent from the total estimated wage costs within the scope of an
investment project provided for in the contract for the
settlement of the estimated wage costs for which State aid has
not been received, that is, the financing in the amount of at
least 25 per cent from own economic resources or external
financial resources for which no public aid has been received,
including State or local government guarantee or State or local
government loan with preferential conditions has not been
received;
8) the certification of a zone capital company that work on
the project, in accordance with Section 1, Paragraph two, Clause
12 of this Law, will commence only after the entry into effect of
the contract for the settlement of the estimated wage costs;
9) the maximum applicable sum of direct tax rebates in the
contract for the settlement of the estimated wage costs;
10) application of the aid percentage determined in the
contract until the moment when the maximum applicable sum of
direct tax rebates laid down in the contract for the settlement
of the estimated wage costs in relation to the accumulated sum of
eligible costs is reached;
11) application of the aid percentage determined in the
contract to the enterprise income tax reliefs and immovable
property tax rebates laid down in this Law.
(3) For the conclusion of a contract for making investments, a
capital company shall submit at least the information indicated
in Annex 8 to this Law to a zone authority or free port
authority.
(31) For the conclusion of the contract for the
settlement of the estimated wage costs, a zone capital company
shall submit to a zone authority at least the information
indicated in Annex 9 to this Law.
(4) The right to apply the direct tax reliefs to the
investments provided for in a contract for making investments may
be exercised if the capital company has made investments only
after the contract for making investments has entered into
effect. If the capital company wishes to cumulate the aid laid
down in this Law in the form of tax reliefs with other aid for
making initial investments, the contract for making investments
which has been concluded with the zone authority or free port
authority shall enter into effect and the capital company shall
commence making investments only after all the authorities
involved have taken the decision to provide aid to the investment
project. In the cases referred to in Section 8.1,
Paragraph five of this Law, the contract for making investments
shall enter into effect only after receipt of the decision of the
European Commission.
(5) The right to receive the direct tax reliefs for the
estimated wage costs provided for in the contract for the
settlement of the estimated wage costs shall apply if a zone
capital company has commenced work on the project in accordance
with Section 1, Paragraph two, Clause 12 of this Law only after
the entry into effect of the contract for the settlement of the
estimated wage costs.
[3 July 2014; 14 May 2020; 13 May 2021; 29 February
2024]
Section 6. Immovable Property Tax
Rebate
(1) A zone or licensed capital company is entitled to receive
an immovable property tax rebate in the amount of 80 per cent of
the calculated tax amount (not receiving other rebates) for the
immovable property located in the territory of the zone or free
port which is in its ownership, legal possession, or which has
been granted for use thereto, unless otherwise provided for in
the binding regulations of the local government issued in
accordance with Paragraphs 2.1 and 2.2 of
this Section.
(2) By the decision of a local government, a zone or licensed
capital company is entitled to receive an immovable property tax
rebate up to the amount of 20 per cent of the calculated tax
amount (not receiving other rebates) for the immovable property
located in the territory of the zone or free port which is in its
ownership, legal possession, or which has been granted for use
thereto.
(21) A local government is entitled, by issuing
binding regulations, to reduce the percentage amount of the
immovable property tax rebate referred to in Paragraph one of
this Section, determining the amount thereof not less than 10 per
cent of the calculated tax amount (not applying other rebates).
When exercising the right provided for in this Paragraph of this
Section, a local government is not entitled to concurrently apply
Paragraph two of this Section.
(22) A local government shall, by issuing the
binding regulations provided for in Paragraph 21 of
this Section, comply with the conditions of this Law and also the
principles for determining tax reliefs provided for in Section
3.1, Paragraph one and Paragraph two, Clause 2 of the
law On Immovable Property Tax and shall publish the adopted
binding regulation by 1 November of the pre-taxation year.
(3) In the immovable property tax payment notification, a
local government shall state the sum of immovable property tax to
be paid within the taxation period, taking into account the tax
rebate determined in accordance with the provisions laid down in
this Section.
(4) The immovable property tax rebate referred to in Paragraph
one of this Section shall be taken into account when making the
immovable property tax forecast to be used by local governments
for the calculation of local government financial equalisation
account for the next financial year.
(5) A zone authority or the Free Port of Rīga Authority shall
not pay the immovable property tax or any other tax which may be
introduced in place of the aforementioned tax for the immovable
property which is located in the territory of the zone or free
port and belongs to the State or local government, and which has
been granted for use to the zone authority or free port authority
in accordance with law and has not been transferred further to
another user.
[19 December 2006; 16 June 2016; 14 May 2020]
Section 7. Enterprise Income Tax
Reliefs
(1) A zone capital company or licensed capital company is
entitled to receive the enterprise income tax rebate in the
amount of 80 per cent of the calculated tax amount.
(2) [1 March 2018]
(3) [3 July 2014]
(4) [3 July 2014]
[19 December 2006; 3 July 2014; 1 March 2018; 14 May
2020]
Section 8. Restrictions on the
Application of Direct Tax Rebates
(1) A zone capital company or licensed capital company is
entitled to receive the tax rebates prescribed in Section 6,
Paragraph one, Paragraphs one and two or Paragraph
2.1, and Section 7, Paragraph one of this Law within a
taxation period if the accumulated sum of direct tax rebates and
the rebates calculated for the taxation period in accordance with
Section 6, Paragraph one, Paragraphs one and two or Paragraph
2.1 and Section 7, Paragraph one of this Law together
do not exceed the following percentage of the accumulated sum of
eligible costs to be applied to the capital company:
1) in the case of a zone capital company or licensed capital
company which does not conform to the criteria set out in Annex I
to Commission Regulation No 651/2014 - 30 per cent of the
accumulated sum of eligible costs in the Free Port of Rīga and 40
per cent of the accumulated sum of eligible costs in the Free
Port of Ventspils, the Liepāja Special Economic Zone, the Rēzekne
Special Economic Zone, and the Latgale Special Economic Zone;
2) in the case of a zone capital company or licensed capital
company which conforms to the status of a medium-sized capital
company set out in Annex I to Commission Regulation No 651/2014 -
40 per cent of the accumulated sum of eligible costs in the Free
Port of Rīga and 50 per cent of the accumulated sum of eligible
costs in the Free Port of Ventspils, the Liepāja Special Economic
Zone, the Rēzekne Special Economic Zone, and the Latgale Special
Economic Zone;
3) in the case of a zone capital company or licensed capital
company which conforms to the status of a small capital company
set out in Annex I to Commission Regulation No 651/2014 - 50 per
cent of the accumulated sum of eligible costs in the Free Port of
Rīga and 60 per cent of the accumulated sum of eligible costs in
the Free Port of Ventspils, the Liepāja Special Economic Zone,
the Rēzekne Special Economic Zone, and the Latgale Special
Economic Zone.
(2) [14 May 2020]
(3) [19 December 2006]
(4) [3 July 2014]
(5) If a zone capital company or a licensed capital company
which has made investments in accordance with Section 1,
Paragraph two, Clause 12 of this Law or settled the estimated
wage costs in accordance with Section 1, Paragraph two, Clause
4.1 of this Law is liquidated or the acquired assets
are alienated prior to the expiry of the time limit referred to
in Article 14(5) of Commission Regulation No 651/2014 or the
workplaces created as a result of the investments are not
maintained until the expiry of the time limit specified in
Article 14(9) of Commission Regulation No 651/2014, or within two
years after the completion of the initial investment for which
aid in the form of the direct tax reliefs is claimed, relocates
or has infringed other requirements of Commission Regulation No
651/2014, it shall recalculate the direct taxes for the taxation
periods in which the direct tax reliefs were granted and pay into
the State and local government budgets respectively the entire
amount by which the taxes due were reduced as a result of the
application of the direct tax reliefs.
(6) If a zone capital company or licensed capital company is
reorganised prior to the end of the time limit referred to in
Article 14(5) of Commission Regulation No 651/2014 in conformity
with Section 1, Paragraph three, five or nineteen of the
Enterprise Income Tax Law and its investments which have been
made in accordance with Section 1, Paragraph two, Clause 12 of
this Law transfer into the ownership of another capital
company:
1) the reorganised (acquiring, acquired, to be acquired or to
be divided) capital company has the right to receive the direct
tax reliefs specified in this Law in relation to the unused
accrued rebate sum in proportion to the retained or taken over
amount of investments (the initial value of the investments shall
be taken as the basis for the calculation thereof), if the
reorganised capital company has acquired the status of a zone
capital company or licensed capital company under the following
conditions:
a) the value of the investments retained or taken over by the
reorganised capital company forms more than 75 per cent of the
total value of the investments made thereby in accordance with
Section 1, Paragraph two, Clause 12 of this Law;
b) the basic type of commercial activity of the reorganised
capital company which comprises at least 75 per cent of the net
turnover of the capital company conforms to the basic type of
commercial activity of the capital company to be reorganised and
is preserved for the entire period of validity of the permit to
receive the direct tax reliefs;
c) the commercial activity of the reorganised capital company
takes place in same territory of the special economic zone or
free port in which the zone capital company or licensed capital
company to be reorganised performed commercial activities prior
to reorganisation;
2) which has not acquired the status of a zone capital company
or licensed capital company, the capital company to be
reorganised shall recalculate the direct taxes for the taxation
periods in which direct tax reliefs were applied, and shall pay
into the budget the sum by which the taxes to be paid were
reduced as a result of the application of such reliefs.
(7) In the cases referred to in Paragraph five and Paragraph
six, Clause 2 of this Section, the reduced sum of direct taxes
which has formed as a result of the application of direct tax
reliefs shall be deemed to be a late tax payment, and late
payment charge shall be calculated for it in accordance with the
procedures laid down in the law On Taxes and Fees.
(8) If unlawful State aid is to be recovered for the period
exceeding the time limit specified in Section 23, Paragraph two
of the law On Taxes and Fees, a zone capital company or licensed
capital company shall, in addition to the amount referred to in
Paragraphs five and seven of this Section, pay the unlawfully
received State aid, together with interest, into the State and
local government budgets respectively. The interest shall be
calculated at the rates published by the European Commission in
accordance with Article 10 of Commission Regulation (EC) No
794/2004 of 21 April 2004 implementing Council Regulation (EU)
2015/1589 laying down detailed rules for the application of
Article 108 of the Treaty on the Functioning of the European
Union by adding 100 basis points to the interest, following the
method for applying the interest rate laid down in Article 11 of
Commission Regulation (EC) No 794/2004 of 21 April 2004
implementing Council Regulation (EU) 2015/1589 laying down
detailed rules for the application of Article 108 of the Treaty
on the Functioning of the European Union.
(9) The Cabinet shall determine the procedures for the
calculation and collection of the illegal State aid and interest
referred to in Paragraph eight of this Section and the
authorities responsible for the recovery of the illegal State aid
and their obligations.
[22 May 2003; 31 March 2004; 19 December 2006; 12 September
2013; 3 July 2014; 16 June 2016; 1 March 2018; 14 May 2020; 3
March 2022]
Section 8.1 Application
of Tax Rebates to Large Investment Projects
(1) For the application of this Law, a project by a zone
capital company or licensed capital company the amount of the
eligible costs of which exceeds EUR 50 million shall be
considered a large investment project. The maximum permissible
percentage laid down in Section 8, Paragraph one of this Law
shall not be applied to a large investment project.
(2) When determining the amount of the planned project and the
permissible percentage for the application of tax reliefs, all
initial investments of the capital company (at group level) which
are related to the same or similar activities and which are
commenced by the capital company within three years from the day
when the works on the new initial investment which were performed
at the same Level III region of the Nomenclature of Territorial
Units for Statistics (NUTS) (single investment project), and for
the making of which the capital company has received or is
planning to receive aid are commenced. The actual initial
investments and investments provided for in the relevant
projects, but not been made yet, shall be taken into account when
determining the amount of all initial investments.
(3) For large investment projects the sum of eligible costs of
which exceeds EUR 55 million, regardless of whether investments
are made by a small, medium-sized, or large capital company, a
zone authority or free port authority shall determine in the
contract for making investments or the contract for the
settlement of the estimated wage costs the permissible percentage
which may be reached by the sum of direct tax rebates accumulated
by a zone capital company or licensed capital company over a
taxation period in relation to the accumulated sum of eligible
costs of the zone capital company or licensed capital company, in
conformity with the following conditions:
1) 30 per cent of the accumulated sum of eligible costs is
applied to a project in the amount of up to EUR 55 million;
2) 15 per cent of the accumulated sum of eligible costs is
applied to the part of the project in the amount from EUR 55 to
110 million;
3) zero per cent of the accumulated sum of eligible costs is
applied to the part of the project which exceeds EUR 110
million.
(4) For large investment projects the sum of eligible costs of
which exceed EUR 55 million, the maximum applicable sum of direct
tax rebates shall not exceed EUR 24.75 million.
(5) For a large investment project the estimated eligible
costs of which exceed EUR 110 million and the sum of direct tax
rebates exceeds EUR 24.75 million, a zone authority or free port
authority may, in the contract for making investments or for the
settlement of the estimated wage costs, determine the maximum
applicable sum of direct tax rebates which exceeds EUR 24.75
million if:
1) the Cabinet has taken the decision to support a large
investment project and on the maximum applicable sum of direct
tax rebates which exceeds EUR 24.75 million;
2) the decision of the European Commission on the
compatibility of aid with the common market has been
received.
(6) In case of exceeding the sum of direct tax rebates
specified in Paragraph five of this Section, the Ministry of
Transport shall submit the necessary information to the Cabinet.
After receipt of the Cabinet decision, the Ministry of Transport
shall submit a State aid notification to the European Commission
in accordance with the procedures laid down in the laws and
regulations regarding control of aid to commercial
activities.
[14 May 2020; 3 March 2022; 29 February 2024]
Section 8.2 Cumulation of
Tax Reliefs with Other Aid to Initial Investments
(1) If a zone capital company or licensed capital company
receives or is planning to receive another aid for making initial
investments for the same costs in addition to the aid laid down
in this Law, then the maximum permissible percentage specified in
Section 8, Paragraph one of this Law shall not be applied, but
the zone authority or free port authority shall, in the contract
for making investments, determine the maximum permissible
percentage for the investments specified in the contract for
making investments.
(2) When determining the maximum permissible percentage, it
must be ensured that, as a result of cumulating aids, the
percentage applicable to the respective capital company does not
exceed the permissible percentage laid down in Section 8,
Paragraph one and Section 8.1, Paragraph three of this
Law for the application of tax reliefs.
(3) [14 May 2020]
(4) If aid for the estimated wage costs is applied to a zone
capital company, this aid may not be combined with regional aid
within the scope of the same or other regional aid projects or
programmes, including in respect of aid for wage costs or initial
investment costs, and also with other aid for the settlement of
wage costs within the scope of other aid projects or
programmes.
[3 July 2014; 14 May 2020]
Section 9. Conditions for the
Application of Direct Tax Reliefs
(1) A zone capital company or licensed capital company shall
acquire the right to receive the direct tax reliefs as of the
taxation period in which the permit to apply the direct tax
reliefs has been issued and the contract for making investments
or for the settlement of the estimated wage costs has been
concluded.
(2) The right to receive the direct tax reliefs shall expire
as of the taxation period in which the permit to apply the direct
tax reliefs has lost its validity.
(3) The taxation period of the enterprise income tax and
immovable property tax for a zone capital company or licensed
capital company and a zone authority or free port authority is
the calendar year. The first taxation period may be shorter than
a calendar year, but may not exceed 12 months.
[19 December 2006; 3 July 2014; 14 May 2020]
Section 10. Procedures for the
Application of the Enterprise Tax Rebates
[14 May 2020]
Section 11. Application of the
Enterprise Income Tax Rebates
[14 May 2020]
Section 12. Provision of Information
on the Application of Direct Tax Rebates
(1) The following information shall be submitted to the State
Revenue Service:
1) by a zone capital company or licensed capital company which
receives the direct tax rebates concurrently with the annual
statement of the company within the time limit laid down in the
Law on Annual Statements and Consolidated Annual Statements:
a) a report on the application of the enterprise income tax
rebate within the taxation period;
b) information on other aid received for the making of initial
investments, including de minimis aid granted for making initial
investments for the same eligible costs, and a report on the
accumulated sum of direct tax rebates and accumulated sum of
eligible costs;
2) by a local government by 1 May of the post-taxation year -
a report on the application of the immovable property tax rebates
in the taxation period.
(2) The submission of the reports and information referred to
in Paragraph one of this Section, sample forms and the procedures
for their filling in shall be determined by the Cabinet.
(3) The State Revenue Service shall submit the information
laid down in Article 9(1)(c) and 9(2) of Commission Regulation No
651/2014 to the zone authority and free port authority by 1
October of the post-taxation year.
(4) A zone authority or free port authority shall, by 1 March
of the post-taxation year, submit to the State Revenue Service,
the local government, the Ministry of Transport, the Ministry of
Environmental Protection and Regional Development and the
Ministry of Finance information on zone capital companies or
licensed capital companies:
1) to which the permit to apply the direct tax reliefs has
been issued within the taxation period;
2) with which a new contract for making investments has been
concluded in the taxation period, indicating the total amount of
investments, investment periods, the maximum applicable sum of
direct tax rebates, the aid percentage applicable to investments
determined in conformity with the conditions of Section 8,
Paragraph one, Section 8.1 or Section 8.2,
Paragraphs one and two of this Law;
21) with which a new contract for the settlement of
the estimated wage costs has been concluded in the taxation
period, indicating the total sum of estimated wage costs, start
and end date, the maximum applicable amount of direct tax rebates
and the applicable aid percentage determined in conformity with
the conditions of Section 8, Paragraphs one and two, Section
8.1, and Section 8.2, Paragraph four of
this Law;
3) whom the issued permit to apply the direct tax relief has
lost its validity within the taxation period;
4) which discontinue commercial activity or whose activity has
been terminated in accordance with the Commercial Law.
(5) A zone authority or free port authority shall, upon
request of the State Revenue Service, local government, the
Ministry of Transport, or the Ministry of Finance, submit a copy
of the contract for making investments or the settlement of the
estimated wage costs concluded between it and a zone capital
company or licensed capital company and the annex to the
contract, i.e. the planned investment schedule.
(6) A zone capital company or licensed capital company shall,
by 1 March of the post-taxation year, inform the zone authority
or free port authority of the year when it received direct tax
rebates in accordance with the conditions of this Law for the
last time.
[3 July 2014; 16 June 2016; 14 May 2020]
Section 12.1 Storage of
Information on the Application of Direct Tax Rebates
(1) A zone capital company or licensed capital company which
receives direct tax rebates within the scope of this Law shall
store data on the investments made, wage costs settled, and
direct tax rebates received for 10 years from the year when the
direct tax rebates were received by the zone capital company or
licensed capital company in accordance with the conditions of
this Law for the last time.
(2) The State Revenue Service and the local government shall
store reports on the application of direct tax rebates in the
taxation period which have been received in accordance with
Section 12, Paragraph one of this Law for 10 years from the year
when the direct tax rebates were received by the zone capital
company or licensed capital company for the last time in
accordance with the conditions of this Law.
(3) A zone authority or free port authority shall store the
contracts for making investments and for the settlement of the
estimated wage costs concluded with a commercial company for 10
years from the year when the direct tax rebates were received by
a zone capital company or licensed capital company in accordance
with the conditions of this Law for the last time.
[14 May 2020]
Section 12.2 Publishing
Information on Aid for Commercial Activity by Applying Direct Tax
Reliefs
Publication of information on aid for commercial activity
provided within the framework of this Law by applying direct tax
reliefs shall be ensured by the respective zone authority or free
port authority in conformity with Article 9(1), (2) and (4) of
Commission Regulation No 651/2014. Information shall be published
in conformity with the requirements laid down in Annexes II and
III to Commission Regulation No 651/2014.
[16 June 2016]
Section 12.3 Control of
the Sum of the Tax Reliefs Applied
(1) In order to ensure the enforcement of the restriction laid
down in Article 1(2)(a) of Commission Regulation No 651/2014, the
State Revenue Service shall, by 1 October of the post-taxation
year, inform the Ministry of Transport whether the total sum of
the direct tax rebates applied in the taxation period in
accordance with this Law exceeds the restrictions for the annual
State aid expenditures laid down in Article 1(2)(a) of Commission
Regulation No 651/2014.
(2) In case of exceeding the restriction for the annual State
aid expenditures laid down in Article 1(2)(a) of Commission
Regulation No 651/2014, the Ministry of Transport shall, within
20 working days after receipt of information from the State
Revenue Service, submit an evaluation plan to the European
Commission.
[3 July 2014]
Section 13. [3 July 2014 / See Paragraph 17 of
Transitional Provisions]
Section 14. Legal Basis for
Providing Aid
Within the scope of this Law, aid shall be provided in
accordance with Chapter III, Section 1 (Regional aid) of
Commission Regulation No 651/2014 (published in the Official
Journal of the European Union L 187/1, 26.6.2014), as amended by
Commission Regulation (EU) 2017/1084 of 14 June 2017 amending
Regulation (EU) No 651/2014 as regards aid for port and airport
infrastructure, notification thresholds for aid for culture and
heritage conservation and for aid for sport and multifunctional
recreational infrastructures, and regional operating aid schemes
for outermost regions and amending Regulation (EU) No 702/2014 as
regards the calculation of eligible costs (published in the
Official Journal of the European Union L 156/1, 20.6.2017), as
amended by Commission Regulation (EU) 2020/972 of 2 July 2020
amending Regulation (EU) No 1407/2013 as regards its prolongation
and amending Regulation (EU) No 651/2014 as regards its
prolongation and relevant adjustments (published in the Official
Journal of the European Union L 215/3 of 7.7.2020), and as
amended by Commission Regulation (EU) 2021/1237 of 23 July 2021
amending Regulation (EU) No 651/2014 declaring certain categories
of aid compatible with the internal market in application of
Articles 107 and 108 of the Treaty (published in the Official
Journal of the European Union L 270/39 of 29.7.2021), and also as
amended by Commission Regulation (EU) 2023/1315 of 23 June 2023
amending Regulation (EU) No 651/2014 declaring certain categories
of aid compatible with the internal market in application of
Articles 107 and 108 of the Treaty and Regulation (EU) 2022/2473
declaring certain categories of aid to undertakings active in the
production, processing and marketing of fishery and aquaculture
products compatible with the internal market in application of
Articles 107 and 108 of the Treaty (published in the Official
Journal of the European Union L 167/1, 30.06.2023).
[3 March 2022; 29 February 2024]
Transitional Provisions
1. Until 30 April 2004, construction services provided to a
zone capital company or licensed capital company, a free port
authority or zone authority by a person taxable with value added
tax in the free zone shall be taxable with the zero per cent rate
of value added tax. The zero per cent rate of value added tax
shall, until 30 April 2004, also be applied to those construction
services which are provided by taxable persons to a free port
authority or zone authority outside of the territory of free
zones.
[22 May 2003; 19 December 2006]
2. Permits to apply the direct tax reliefs that are issued to
zone capital companies until 31 December 2001 shall be considered
to be in effect.
[19 December 2006]
3. As of 1 January 2003, the restrictions on the application
of direct tax rebates specified in this Law shall be applicable
to zone capital companies which have acquired the status of a
zone capital company until 31 December 2001 and to which the
permit to apply the direct tax reliefs has been issued until 31
December 2001, and to capital companies licensed by the Free Port
of Riga.
[19 December 2006]
4. Section 6 of this Law shall not apply to the licensed
capital companies to which the licence has been issued by the
Free Port of Ventspils Authority until the day of coming into
force of this Law.
[19 December 2006]
5. Capital companies of the Liepāja Special Economic Zone and
the Rēzekne Special Economic Zone which, until the day of coming
into force of this Law, have calculated the depreciation of fixed
assets used for economic activities for the purposes of
calculating the enterprise income tax on the basis of rates which
differ from those specified in the law On Enterprise Income Tax
in relation to fixed assets which have been acquired until the
day of coming into force of this Law shall continue to apply the
previously applied fixed asset depreciation rates until the final
writing off of the relevant fixed asset or fixed asset category
depreciation. The writing off of the depreciation of the fixed
assets used in economic activity which are acquired after the day
of coming into force of this Law shall be performed in accordance
with the general procedures specified in the law On Enterprise
Income Tax.
[19 December 2006]
6. A licensed capital company, zone capital company, and port
authority is entitled to apply the direct tax reliefs provided
for in Sections 6, 7, 8, 9, 12, and 13 of this Law to such
investments and wage costs which are made and settled until 31
December 2035 (inclusive), not exceeding the permissible State
aid intensity specified in this Law and the contract for the
making of investments or for the settlement of estimated wage
costs for the accumulated direct tax rebates in relation to the
accumulated sum of eligible costs.
[29 February 2024]
7. [3 July 2014]
8. [4 April 2013]
9. Until 31 December 2003, a zone capital company or licensed
capital company which pays the immovable property tax for
buildings and structures shall calculate the amount of tax to be
paid into the budget for the taxation year by taking into account
the rebate specified in Section 6, Paragraphs one and two of this
Law, as well as the procedures for the application of the
immovable property tax rebate specified in Section 10 of this
Law.
[22 May 2003; 19 December 2006]
10. [31 March 2004]
11. Amendments to Section 1, Paragraph two of this Law (the
terms used in this Law in relation to the Rēzekne Special
Economic Zone) shall come into force simultaneously with the
relevant amendments to the Law on the Rēzekne Special Economic
Zone.
[20 January 2005]
12. Section 3, Paragraph ten of this Law shall come into force
on 1 July 2005.
[20 January 2005]
13. A zone capital company or licensed capital company which
operates in the fishery sector referred to in Annex 5 to this Law
shall, after 1 January 2007, continue to receive the direct tax
reliefs for the investments which were made until 31 December
2006 in accordance with the norms of the Law which were in force
until 31 December 2006.
[19 December 2006; 14 May 2020]
14. A zone capital company or licensed capital company which
operates in the fishery sector referred to in Annex 5 to this Law
shall, after 1 January 2007, continue to receive the direct tax
reliefs for the investments which were made after 1 January 2007
in accordance with a contract for making investments which has
been concluded between the zone authority and the zone capital
company or the free port authority and the licensed capital
company until 30 December 2006. In order for the capital company
operating in the fishery sector to receive tax reliefs for the
investments made after 1 January 2007, the concluded contract
must precisely indicate the investment plans, the investment sums
and periods in which the investments shall be made. The direct
tax reliefs shall be applied to the investments made after 1
January 2007 in accordance the norms of the Law which were in
force until 31 December 2006.
[19 December 2006; 14 May 2020]
15. A zone capital company or licensed capital company which
has not concluded a contract with a zone authority or free port
authority in accordance with Section 1, Paragraph two, Clause 13
of this Law shall apply to the investments actually made until 31
December 2013 the percentage referred to in Section 8 of this Law
until the taxation period when the maximum amount of the
percentage of the accumulated investment amount applicable to the
capital company which is determined in the contract is
reached.
[4 April 2013]
16. Amendments shall be made until 31 December 2014 to the
contracts for making investments concluded until 30 June 2014 by
determining the maximum sum of direct tax rebates applicable to
investments provided for in the contract in relation to the
accumulated sum of investments.
[3 July 2014]
17. Amendments to Section 1, Paragraph two, Clause 1 of this
Law in relation to deletion of the words "and the special
procedure for making State social insurance payments", amendments
to Section 2, Paragraph two, the title of Chapter III and in
relation to deletion of Section 13 shall come into force on 1
September 2014.
[3 July 2014]
18. Contracts for making investments which have been concluded
in the period from 10 January 2018 until the date of the entry
into force of amendments to Section 5, Paragraph six, Clause 2 of
and Paragraph 22 of Annex 8 to this Law regarding the obligation
to provide a certification shall be effective if the capital
company has, prior to concluding the contract for making
investments, submitted to the zone authority or free port
authority certification stating that within the last two years
before the submission of the application for the conclusion of
the contract for making investments it has not carried out
relocation to the respective territory of the zone or free port
where the initial investment for which aid is requested shall be
made and undertakes not to do so for two years after completion
of the initial investment for which aid is requested, and the
zone authority or free port authority has verified the compliance
of such certification with Article 14(16) of Commission
Regulation No 651/2014 and also other requirements laid down in
this Law have been complied with.
[1 March 2018]
19. The Cabinet shall, by 31 December 2020, issue the
regulations referred to in Section 8, Paragraph nine of this
Law.
[14 May 2020]
20. The provisions of Section 2.1, Paragraph two of
this Law shall apply to the contracts of zone capital companies
and licensed capital companies for making investments or the
settlement of the estimated wage costs in the territory of the
zone or free port which are concluded with the zone authority or
free port authority starting from the date on which Section
2.1, Paragraph two of this Law enters into force.
[13 May 2021]
21. Until the first meeting of the council of Liepāja local
government, Dienvidkurzeme municipality, and Kuldīga municipality
(in respect of the Alsunga rural territory) elected in the local
government election of 2021, the provisions of this Law regarding
the State aid in the form of direct taxes for the newly created
workplaces as a result of initial investments in respect of the
Liepāja Special Economic Zone shall be applicable to such
employees of a zone capital company whose declared place of
residence is in the city of Liepāja, Aizpute municipality,
Alsunga municipality, Durbe municipality, Grobiņa municipality,
Nīca municipality, Pāvilosta municipality, Priekule municipality,
Rucava municipality, and Vaiņode municipality.
[13 May 2021]
22. The Ministry of Transport shall ensure the fulfilment of
the notification requirement laid down in Article 11 of
Commission Regulation No 651/2014 regarding the application of
State aid in the form of direct taxes to newly created workplaces
as a result of initial investment to the Liepāja Special Economic
Zone.
[13 May 2021]
23. When applying Section 3, Paragraph nine of this Law until
the date on which the rate referred to in Section 14, Paragraph
2.3 of the law On Excise Duties shall be commenced to
be applied pursuant to Paragraph 168 of the Transitional
Provisions of the law On Excise Duties, the provisions of
Paragraph 169 of the Transitional Provisions of the law On Excise
Duties shall be taken into account.
[7 December 2023]
Informative Reference to
Commission Regulations
[1 March 2018]
This Law shall come into force on 1 January 2002.
This Law has been adopted by the Saeima on 27 July
2001.
President V. Vīķe-Freiberga
Riga, 10 August 2001
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 1
Transport Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 2
Steel Industry Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 3
Synthetic Fibre Manufacturing
Sector Capital Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 4
Agricultural Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 5
Fishery Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 6
Coal Industry Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 7
Ship Building Sector Capital
Companies
[3 July 2014]
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 8
Information to be Provided to the
Zone Authority or Free Port Authority for the Conclusion of a
Contract for Making Investments
[3 July 2014; 1 March 2018; 14
May 2020; 3 March 2022; 29 February 2024]
1. Name, registration number of the capital company,
registration number, contact information of the taxpayer.
2. The zone authority or free port authority to which the
application was submitted.
3. Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS), in which investments will be made.
4. Title of the investment project.
5. Description of the planned initial investments, indicating
whether investments are planned in relation to:
a) the establishment of a new capital company;
b) the increase in the production or service capacity of an
existing capital company;
c) the diversification of the production of an existing
capital company with products, which have not been previously
produced in the capital company;
d) fundamental change in production processes of a capital
company.
6. Amount of the planned initial investments (euros).
7. Start date of the planned initial investments.
8. End date of the planned initial investments.
9. In relation to other initial investment projects commenced
by the capital company for the implementation of which aid is
received, including de minimis aid, the following information
shall be indicated:
a) title of the project;
b) Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS), in which investments will be made;
c) investment objects and their relation to the planned
investments for receipt of tax reliefs;
d) the maximum aid interest rate applied;
e) amount of investments (euros);
f) start and end date for making investments;
g) legal basis for providing aid (law, Cabinet regulation,
etc.);
h) date of the decision of the authority providing aid to
assign aid.
10. In relation to other planned initial investment projects
of the capital company for the implementation of which aid,
including de minimis aid, is planned to be received, the
following information shall be provided:
a) title of the project;
b) Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS), in which investments will be made;
c) investment objects and their relation to the planned
investments for receipt of tax reliefs;
d) the maximum aid interest rate applied;
e) amount of investments (euros);
f) start and end date for making investments;
g) legal basis for providing aid (law, Cabinet regulation,
etc.);
h) date of the decision of the authority providing aid to
assign aid.
11. The following information shall be provided in relation to
other implemented and completed initial investment projects of
the capital company which are related to the same or similar
activities and for the implementation of which aid was received,
including de minimis aid:
a) title of the project;
b) Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS), in which investments were made;
c) investment objects and their relation to the planned
investments for receipt of tax reliefs;
d) the maximum aid interest rate applied;
e) amount of investments (euros);
f) start and end date for making investments;
g) legal basis for providing aid (law, Cabinet regulation,
etc.).
12. If the capital company provides the information referred
to in Paragraphs 9, 10 and 11 of this Annex, it shall be
indicated whether the initial investment projects implemented and
planned by the capital company do not qualify as a single
investment project as defined in Section 8.1,
Paragraph two of this Law.
13. The planned aid interest for the application of tax
reliefs (determined in accordance with Section 8, Paragraph one,
Section 8.1, Paragraph three or Section
8.2, Paragraphs one and two of this Law).
14. Status of the capital company at the time of submitting
the project application as defined in Annex I to Commission
Regulation No 651/2014 (large, medium-sized or small capital
company).
15. Certification of the capital company that it will ensure
financial investment in the amount of at least 25 per cent from
the total investment project costs provided for in the contract
for making investments for which State aid has not been received,
that is, financing in the amount of at least 25 per cent from own
economic resources or external financial resources for which no
public aid has been received, including State or local government
guarantee or State or local government loan with preferential
conditions has not been received.
16. Taking into account the sectoral restrictions laid down in
Section 5, Paragraphs four and 4.1 of this Law, the
goods manufactured or services provided within the scope of the
investment project shall be determined according to
PRODCOM/NACE/CPA (CPA - in case of service projects)
classifications where:
PRODCOM - production statistics for mining and manufacturing
products;
NACE - general classification of economic activities;
CPA - Statistical Classification of Products by Activity of
the European Union.
17. Certification that investments will remain in the
respective district for at least five years (or in case or small
or medium-sized capital companies - three years) since their
making.
18. Certification of the capital company that an order on the
recovery of unlawfully assigned aid according to a previous
decision of the capital company does not apply to the capital
company.
19. Information that the capital company does not conform to
the status of a capital company in difficulty in accordance with
Article 2(18) of Commission Regulation No 651/2014, except for
the capital companies which were not in difficulty on 31 December
2019, but became the capital companies in difficulty in the
period from 1 January 2020 to 31 December 2021 and continue to be
such after 31 December 2021.
20. Certification that the capital company has not commenced
and will not commence works on the project prior to entering into
effect of the contract for making an investment.
21. If tax reliefs are planned to be cumulated with other aid
to investments within the scope of this Law, certification of the
capital company that making of investments has not been
commenced.
22. Certification that a capital company, within the past two
years prior to the submission of the application for the
conclusion a contract for making investments, has not carried out
relocation to the respective territory of the zone or free port
where the initial investment for which aid is requested shall be
made and undertakes not to do so for two years after completion
of the initial investment for which aid is requested.
Law On the Application of Taxes in
Free Ports and Special Economic Zones
Annex 9
Information to be Provided to a
Zone Authority for the Conclusion of a Contract for the
Settlement of the Estimated Wage Costs
[14 May 2020; 13 May 2021; 3
March 2022; 29 February 2024]
1. Name, registration number, taxpayer registration number and
contact information of a zone capital company.
2. The zone authority to which the application has been
submitted.
3. Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS) in which initial investments will be
made.
4. Title of the investment project.
5. Description of the planned initial investments by
indicating whether initial investments are planned in relation
to:
a) the establishment of a new capital company;
b) the increase in the production or service capacity of an
existing capital company;
c) the diversification of the production of an existing
capital company with products, which have not been previously
produced in the capital company;
d) fundamental change in production processes of a capital
company.
6. The planned number of newly created workplaces.
7. The estimated amount of wage costs (in euros).
8. The start and end dates of the settlement of estimated wage
costs.
9. The following information shall be provided on the sums of
eligible costs (initial investments or estimated wage costs)
settled by the zone capital company in the last three years
within the same or similar activity for which the zone capital
company has received aid and also the estimated sums of eligible
costs:
a) title of the project;
b) Level III region of the Nomenclature of Territorial Units
for Statistics (NUTS) in which the sums of eligible costs were
settled;
c) investment objects and their relation to the planned sums
of eligible costs for the receipt of tax reliefs;
d) the maximum aid interest rate applied;
e) the sum of eligible costs (in euros);
f) the start and end time period for the settlement of
eligible costs;
g) legal basis for providing aid (law, Cabinet regulation,
etc.).
10. The planned aid interest for the application of tax
reliefs for the estimated wage costs (determined in accordance
with Section 8, Paragraphs one and two, Section 8.1,
Paragraph three, or Section 8.2, Paragraph four of
this Law).
11. Status of the zone capital company at the time of
submitting the project application as defined in Annex I to
Commission Regulation No 651/2014 (large, medium-sized, or small
capital company).
12. Certification of a zone capital company that the
investment project will create a net increase in the number of
employees within the meaning of Article 2(32) of Commission
Regulation No 651/2014 compared with the average over the
previous 12 months and that the capital company will provide the
workplace within three years after completion of the initial
investment, taking into account that in accordance with Article
14(9) of Commission Regulation No 651/2014 the number of
workplaces lost during the period shall be deducted from the
number of workplaces created, expressed in annual work units. The
declared place of residence of an employee in relation to a
capital company of the Rēzekne Special Economic Zone and the
Latgale Special Economic Zone is in the Latgale planning region,
and in relation to a capital company of the Liepāja Special
Economic Zone - in the local government of Liepāja State city,
Dienvidkurzeme municipality or Alsunga rural territory of Kuldīga
municipality which is part of the Kurzeme planning region, and
the workplace will be secured for at least five years in a large
capital company and for at least three years in a small or
medium-sized capital company from the day on which the workplace
was first ensured.
13. Certification of a zone capital company that it would
ensure the financial investment in the amount of at least 25 per
cent from the total estimated wage costs within the scope of an
investment project provided for in the contract for the
settlement of estimated wage costs for which State aid has not
been received, that is, financing in the amount of at least 25
per cent from own economic resources or external financial
resources for which no public aid has been received, including
State or local government guarantee or State or local government
loan with preferential conditions has not been received.
14. Certification of a zone capital company that work on the
project, in accordance with Section 1, Paragraph two, Clause 12
of this Law, will commence only after the entry into effect of
the contract for the settlement of the estimated wage costs.
15. Taking into account the restrictions on the type of
economic activity for zone capital companies set out in Section
5, Paragraphs four, 4.1, and 4.2 of this
Law, the estimated wage costs within the investment project shall
be determined for zone capital companies with the type of
economic activity according to NACE - the General Classification
of Economic Activities. A zone capital company shall specify the
relevant code of its economic activity.
16. Certification of a zone capital company that an order on
the recovery of an illegal and incompatible State aid in
accordance with a previous decision of the European Commission
does not apply to it.
17. Information that the zone capital company does not conform
to the status of a zone capital company in difficulty in
accordance with Article 2(18) of Commission Regulation No
651/2014, except for the capital companies which were not in
difficulty on 31 December 2019, but became the capital companies
in difficulty in the period from 1 January 2020 to 31 December
2021 and continue to be such after 31 December 2021.
18. Certification that a zone capital company, within the past
two years prior to the submission of the application for the
conclusion a contract for the settlement of the estimated wage
costs, has not carried out relocation to the relevant territory
of the zone where the settlement of estimated wage costs for
which aid is requested shall be made, and undertakes not to do so
for two years after completion of the initial investment.
1 The Parliament of the Republic of
Latvia
Translation © 2024 Valsts valodas centrs (State
Language Centre)