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].
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 Saeima1 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, Law on the Latgale Special Economic Zone, Law on
the Liepāja Special Economic Zone and Law on the Rēzekne Special
Economic Zone, the Law on Control of Aid for Commercial Activity,
the law On Taxes and Duties, 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) permission 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 Free
Port of Riga Authority regarding 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;
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 - customs duty, natural resources
tax, excise duty and the value added tax;
41) estimated wage costs - costs of newly
created workplaces in the Latgale Special Economic Zone, the
Rēzekne Special Economic Zone, and the Liepāja Special Economic
Zone caused as a result of initial investments laid down in
Clause 12 of this Paragraph of this Section which conform to the
following conditions:
a) they have been laid down in the contract for the settlement
of estimated wage costs concluded by a zone authority and a
capital company;
b) they comprise gross wage before payment of taxes and are
calculated for the time period of two years by comprising the
mandatory State social insurance contributions of the
employer;
c) compared with the average indicator over the previous 12
months, the investment project creates a net increase in the
number of employees within the meaning of Article 2(32) 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);
d) a capital company ensures, not later than within three
years after completing initial investments, each workplace with
an employee whose declared place of residence is located in the
Latgale Planning Region in respect of the Latgale Special
Economic Zone and the Rēzekne Special Economic Zone capital
companies, but in respect of the Liepāja Special Economic Zone
capital companies - 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 for the
case where a workplace has been lost during the time period from
1 January 2020 to 30 June 2021;
5) direct taxes - 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 start
of 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 Liepāja Special Economic Zone capital
company, a Rēzekne Special Economic Zone capital company, a
Latgale Special Economic Zone capital company, 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 start of the taxation period in
which the relevant capital company has concluded a contract with
a zone authority for the settlement of estimated wage costs in
the territory of the zone up to the taxation period (inclusive)
for which the calculation is made - for a Rēzekne Special
Economic Zone capital company, a Latgale Special Economic Zone
capital company, or a Liepāja Special Economic Zone capital
company;
7) accumulated sum of the direct tax reliefs - the sum
of all direct tax reliefs used in accordance with this Law
commencing from the taxation period in which the zone capital
company or licensed capital company has been issued with a 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 special economic zone
territory 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 free port territory
laid down in the Free Port of Ventspils Law or the Free Port of
Rīga Law;
11) zone capital company - a Liepāja Special Economic
Zone capital company with which the zone authority has concluded
a contract for the performance of commercial activities and
making of investments or the settlement of estimated wage costs
in the territory of the Liepāja Special Economic Zone, a Rēzekne
Special Economic Zone capital company with which the zone
authority has concluded a contract for the performance of
commercial activities and making of investments or the settlement
of estimated wages costs in the territory of the Rēzekne Special
Economic Zone, and a Latgale Special Economic Zone capital
company 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 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 for the obtaining of patents and acquisition of
technologies and costs for the purchase of information technology
software) made in the fixed assets of a zone capital company or a
licensed capital company, and also of a zone authority or 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) they qualify as initial investments, that is investment in
the establishment of a new capital company, increase in
production or service capacity of an existing capital company,
diversification of the production of an existing capital company
with products that have not been previously produced in the
capital company, or fundamental change in the production
processes of an existing capital company;
c) the assets purchased are new, except for the case when they
are purchased 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;
d) intangible assets 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
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;
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]
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 2016]
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
in which the owner or holder of more than 25 per cent of capital
shares (stocks) 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 Delivery of Goods and Services
(1) Goods which are not intended for further exportation and
which are supplied to a licensed capital company, a zone capital
company, a zone authority or a free port authority by a
registered value added taxpayer shall be taxable with the
standard rate or reduced rate of the 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
the value added tax:
1) supply of goods to a licensed capital company, a zone
capital company, a zone authority or a 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 value added
taxpayer for further exportation;
2) supply of such goods to a licensed capital company, a zone
capital company, a zone authority or a 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 in the free zone they shall be taxable with
the standard rate or reduced rate of the value added tax in
accordance with the Value Added Tax Law.
(4) If the licensed capital company, a zone capital company, a
zone authority or a 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 purchase,
the licensed capital company, a zone capital company, a zone
authority or a free port authority shall calculate the value
added tax from the initial value, and pay such tax into the State
budget in the taxation period when the supply of the goods took
place and this tax may not be deducted as the input tax.
(5) [20 January 2005]
(6) [20 January 2005]
(7) Petroleum products which are supplied to a licensed
capital company, a zone capital company, a zone authority or a
free port authority shall be exempt from the excise duty while
the they are located in the territory of the free zone of the
licensed capital company, zone capital company, zone authority or
free port authority.
(8) Petroleum products shall be exempt from the excise duty
when these products are used by a licensed capital company, a
zone capital company, a zone authority or a port authority:
1) in ships and other watercrafts which are not used for
leisure and recreational needs;
2) in ships for the manufacture, testing and maintenance
needs;
3) in ships and other watercrafts which are used for works of
excavation and enlargement of waterways;
4) for the generation of energy or in combined equipment
generating electricity and thermal energy.
(81) If in the cases referred to in Paragraph eight
of this Section, 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, then the relevant petroleum products shall be exempt from
the 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 two of the law
On Excise Duties shall be applied to the petroleum products
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, a zone capital
company, a zone authority or a port authority in the territory of
the free zone for:
1) stationary installations;
2) cranes and other similar objects;
3) equipment which is used in construction work only in the
territory of the free zone;
4) machines, which according to the construction are not
intended for participation in traffic on public roads.
(10) The Cabinet shall determine conditions for the
circulation and control of those petroleum products to which
exemptions and reliefs from the excise duty shall be applied in
accordance with Paragraphs seven, eight, 8.1 and nine
of this Section, as well as the conditions for the registration
of the users of such petroleum products.
[22 May 2003; 31 March 2004; 20 January 2005; 19 December
2006; 5 May 2011; 4 April 2013]
Section 4. Restrictions on Retail
Trade
(1) In the territory of the free zone of licensed capital
companies and zone capital companies, the delivery of goods and
provision of services to natural persons (hereinafter - the
retail trade) is prohibited, except for:
1) the delivery of food and medical goods;
2) public catering, medical, communications and financial
transactions;
3) trade in tax-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 delivered and services provided in the
territory of the free zone of a licensed capital company and a
zone capital company that 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 the value added tax in
accordance with the Value Added Tax Law, except those goods and
services which are exempt from the value added tax in accordance
with the Value Added Tax Law.
(3) Delivery of the goods referred to in Paragraph one, Clause
1 of this Section and provision of the services referred to in
Paragraph one, Clause 2 of this Section to natural persons shall
be permitted only for those licensed capital companies or zone
capital companies which have concluded a contract for retail
trade in the territory of a free zone or the territory of a free
port with a zone authority or a free port authority. The
territory and premises 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 the Direct Tax Reliefs
[3 July 2014 / Amendment shall
come into force on 1 September 2014. See Paragraph 17 of
Transitional Provisions]
Section 5. Permit to Apply the
Direct Tax Reliefs
(1) Permit to apply the direct tax reliefs shall be granted by
a zone authority or a free port authority in accordance with the
procedures specified by the Law.
(2) Permit to apply the direct tax reliefs may be granted to a
zone capital company or a licensed capital company which conforms
to 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. 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 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 structural 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 that 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 structural units outside 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 location of the administrative authority or
representation offices of a zone capital company or licensed
capital company outside of the territory of a special economic
zone or free port;
b) negotiations and the concluding of contracts 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) A permit to apply the direct tax reliefs may
be granted to a Rēzekne Special Economic Zone capital company, a
Latgale Special Economic Zone capital company, and a Liepāja
Special Economic Zone capital company which conforms to the
conditions referred to in Paragraph two of this Section and has
selected the type of eligible costs referred to in Section 1,
Paragraph two, Clause 6, Sub-clause "a" or "b" of this Law.
(3) 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 permission 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 Latgale Special Economic Zone capital company agree to revoke
the contract for the making of investments or the settlement of
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 annul 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 Latgale
Special Economic Zone capital company for the making of
investments or the settlement of estimated wage costs and to
annul 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 amount of the direct tax reliefs
determined in contracts concluded for the making of investments
or the settlement of estimated wage costs has been reached in
relation to the accumulated sum of eligible costs.
(4) Permit to apply the direct tax reliefs in the case laid
down in Section 1, Paragraph two, Clause 12 of this Law shall not
be granted by a zone authority or a 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) the capital companies of the synthetic fibres sector
referred to in Article 2(44) of Commission Regulation No 651/2014
as defined in Article 13(a) of Commission Regulation No
651/2014;
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;
7) the capital companies of the shipbuilding sector referred
to in Article 13(a) of Commission Regulation No 651/2014 and
Paragraph 1 of Annex 7 to this Law;
8) the capital companies of the energy generation and
distribution sector 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, except for
the zone capital companies or licensed capital companies which
have included the costs of energy generating equipment in the
calculation of investment costs and they conform to 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) investments are attributable to renewable energy sources or
high-efficiency co-generation.
(41) The Latgale Special Economic Zone Authority
shall not grant the permit to apply the direct tax reliefs for
that laid down in Section 1, Paragraph two, Clauses
4.1 and 12 of this Law in addition to that referred to
in Paragraph four of this Section to capital companies which
implement an 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 Rēzekne Special Economic Zone Authority
shall not grant the permit to apply the direct tax reliefs for
that laid down in Section 1, Paragraph two, Clause 4.1
of this Law in addition to that referred to in Paragraph four of
this Section to capital companies which implement an 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 Liepāja Special Economic Zone Authority
shall not grant the permit to apply the direct tax reliefs for
that laid down in Section 1, Paragraph two, Clauses
4.1 and 12 of this Law in addition to that referred to
in Paragraph four of this Section to capital companies which
implement an 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 the sectors laid
down in Paragraph four, Clauses 4.1 and 4.2
of this Section and in other sectors, a zone authority or a 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 entire time period of
application of tax reliefs until the maximum applicable amount of
the 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 expenses and revenue of the
economic transactions where the revenue and expenses 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 revenue and
expenses of a capital company of other operational sectors.
(6) Upon applying the direct tax reliefs, the 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 time period from 1 January 2020 to 30
June 2021, it has not carried out relocation as defined in
Article 2(61)(a) 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 will be made and undertakes not to do so for two years
after completing 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]
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 the
making of investments or the settlement of estimated wage costs
shall determine the conditions for the application of direct tax
reliefs to the investments provided for in the particular
contract for the making of investments or the settlement of
estimated wage costs for estimated wage costs.
(2) A contract for the making of investments is an agreement
concluded between a capital company and the free port authority
or zone authority for the making of 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 the making of 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 amount of
direct tax reliefs laid down in the contract for the making of
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 estimated
wage costs is an agreement concluded between a zone capital
company and a zone authority for the settlement of 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 estimated wage costs which
is effective on the day of concluding the contract for the
settlement of estimated wage costs by additionally taking into
account the conditions 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 indicator over
the previous 12 months, and that the workplace is ensured by a
capital company within three years after completing initial
investments by considering that the declared place of residence
of the employee is located in the Latgale Planning Region in
respect of a Rēzekne Special Economic Zone and Latgale Special
Economic Zone capital company, but in respect of a Liepāja
Special Economic Zone capital company - in Liepāja local
government, Dienvidkurzeme municipality, or Alsunga rural
territory of Kuldīga municipality included in the Kurzeme
Planning Region, and the workplace will be 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 respective workplace was ensured for the first
time;
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 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 works on
the project in conformity with that laid down in Section 1,
Paragraph two, Clause 12 of this Law would be commenced only
after the contract for the settlement of estimated wage costs has
come into effect;
9) the maximum applicable sum of direct tax reliefs in the
contract for the settlement of estimated wage costs;
10) application of the aid percentage determined in the
contract until the moment when the maximum applicable amount of
direct tax reliefs laid down in the contract for the settlement
of 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 reliefs laid down in this Law.
(3) For the conclusion of a contract for the making of
investments, the capital company shall submit at least the
information indicated in Annex 8 to this Law to the zone
authority or free port authority.
(31) For the conclusion of a contract for the
settlement of estimated wage costs, the zone capital company
shall submit at least the information indicated in Annex 9 to
this Law to the zone authority.
(4) The right to apply the direct tax reliefs to the
investments provided for in a contract for the making of
investments may be exercised if the capital company has made
investments only after the contract for the making of 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 of initial investments, the contract
for the making of investments which has been concluded with the
zone authority or free port authority shall enter into effect and
the capital company shall commence making of 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 the making of investments shall enter into effect
only after receipt of the decision of the European
Commission.
(5) The right to receive direct tax reliefs for the estimated
wage costs provided for in the contract for the settlement of
estimated wage costs may be exercised if the zone capital company
has started works on the project in conformity with that laid
down in Section 1, Paragraph two, Clause 12 of this Law only
after entering into effect of the contract for the settlement of
estimated wage costs.
[3 July 2014; 14 May 2020; 13 May 2021]
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 sum (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 sum
(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, upon issuing binding
regulations, is entitled 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 sum (not applying other rebates). Upon
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, upon issuing the binding
regulations provided for in Paragraph 2.1 of this
Section, shall 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 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 referred to tax for the immovable
property which is located outside the territory of the zone or
free port and belongs to the State or local government, and which
in accordance with law has been granted for use to a zone
authority or free port authority and has not been transferred
further to another user.
[19 December 2006; 16 June 2016; 14 May 2020]
Section 7. Enterprise Income Tax
Relief
(1) A zone capital company or a licensed capital company is
entitled to receive the enterprise income tax rebate in the
amount of 80 per cent of the calculated tax sum.
(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 the Direct Tax Rebates
(1) A zone capital company or a 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 percentage of the accumulated sum of eligible
costs to be applied to the relevant capital company:
1) to a zone capital company or a licensed capital company
which does not conform to the criteria laid down in Annex I to
Commission Regulation No 651/2014 - 30 per cent of the
accumulated sum of eligible costs in the Free Port of Riga 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) to a zone capital company or a licensed capital company
which conforms to the status of a medium-sized capital company
laid down in Annex I to Commission Regulation No 651/2014 - 40
per cent of the accumulated sum of eligible costs in the Free
Port of Riga 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) to a zone capital company or a licensed capital company
which conforms to the status of a small capital company laid down
in Annex I to Commission Regulation No 651/2014 - 50 per cent of
the accumulated sum of eligible costs in the Free Port of Riga
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 conformity with Section 1,
Paragraph two, Clause 12 of this Law or the settlement of
estimated wage costs in conformity with Section 1, Paragraph two,
Clause 4.1 of this Law is liquidated or the purchased
assets are alienated prior to the end of the time period referred
to in Article 14(5) of Commission Regulation No 651/2014 or the
workplaces created as a result of investments are not retained
until the end of the time period referred to in Article 14(9)(c)
of Commission Regulation No 651/2014, or relocation is carried
out within two years after completion of the initial investment
for which aid is requested in the form of direct tax reliefs, or
has violated other requirements laid down in Commission
Regulation No 651/2014, it shall recalculate direct taxes for the
taxation periods in which direct tax reliefs were applied, and
shall pay into the State budget and local government budget
accordingly the entire amount in respect of which the taxes to be
paid were reduced as a result of the application of such
relief.
(6) If prior to the end of the time period referred to in
Article 14(5) of Commission Regulation No 651/2014 a zone capital
company or a licensed capital company is reorganised 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 transfers to 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 a 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 time 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 a 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 Duties.
(8) If an illegal State aid is to be recovered for the period
which exceeds the time period laid down in Section 23, Paragraph
two of the law On Taxes and Duties, a zone capital company or a
licensed capital company shall pay the illegally received State
aid together with interest into the State and local government
budget accordingly in addition to the sum referred to in
Paragraphs five and seven of this Section. Interest shall be
calculated in accordance with their rates which are 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, adding 100 base points
to interest in compliance with the method for applying the
interest 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 of a zone
capital company or licensed capital company the amount of
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 a capital company initiated by the capital
company (at group level) within three years from the day when
works on the new initial investment were started which were made
in 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, shall be taken into account. The actual
initial investments and investments intended for the relevant
projects, but which have not been made yet, shall be taken into
account, when determining the amount of all initial
investments.
(3) For large investment projects, regardless of whether
investments are made by a small, medium-sized or large capital
company, a zone authority or a free port authority shall
determine the permissible percentage which may be reached by the
sum of the direct tax reliefs accumulated by a zone capital
company or a licensed capital company during a taxation period in
relation to the accumulated sum of eligible costs of the zone
capital company or licensed capital company in the contract for
the making of investments or in the contract for the settlement
of estimated wage costs by conforming 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 50 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 50 to
100 million;
3) 0 per cent of the accumulated sum of eligible costs are
applied to the part of the project which exceeds EUR 100
million.
(4) The maximum sum of the direct tax rebates applicable to
large investment projects shall not exceed EUR 22.5 million.
(5) For a large investment project, the estimated eligible
costs of which exceed EUR 100 million and the sum of the direct
tax reliefs exceeds EUR 22.5 million, a zone authority or a free
port authority may determine the maximum applicable amount of
direct tax reliefs which exceeds EUR 22.5 million in the contract
for the making of investments or for the settlement of estimated
wage costs if:
1) the Cabinet has taken the decision to support a large
investment project and on the maximum applicable sum of direct
tax reliefs which exceeds EUR 22.5 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]
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 in
the contract for the making of investments the zone authority or
free port authority shall determine the maximum permissible
percentage for the investments specified in the contract for the
making of investments.
(2) Upon 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 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 a 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 the making of
investments or for the settlement of 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 Rebate
[14 May 2020]
Section 11. Application of the
Enterprise Income Tax Rebate
[14 May 2020]
Section 12. Provision of Information
Regarding the Application of the Direct Tax Rebates
(1) The following information shall be submitted to the State
Revenue Service:
1) by a zone capital company or a licensed capital company
which receives the direct tax rebates concurrently with the
annual statement of the company within the time period laid down
in the Law on the Annual Financial Statements and Consolidated
Financial 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 the 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 a 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 regarding the 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 by indicating the total sum of
investments, the investment periods, the maximum applicable
amount of the direct tax rebates, the aid percentage applicable
to investments which is determined by having regard to 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
estimated wage costs has been concluded in the taxation period by
indicating the total sum of estimated wage costs, start and end
dates, the maximum applicable amount of the direct tax rebates,
and the applicable aid percentage which is determined by having
regard to 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 a free port authority shall, upon a
request of the State Revenue Service, local government, the
Ministry of Transport or the Ministry of Finance, submit to it a
copy of the contract for the making of investments or for the
settlement of estimated wage costs concluded between it and a
zone capital company or a licensed capital company and the annex
to the contract - the planned investment schedule.
(6) A zone capital company or a licensed capital company
shall, by 1 March of the post-taxation year, inform the zone
authority or free port authority on the year when it received the
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 Regarding the Application of the Direct Tax
Rebates
(1) A zone capital company or a licensed capital company which
receives the direct tax rebates within the scope of this Law
shall store data on the investments, wage costs made and the
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 the 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 a zone capital
company or a licensed capital company in accordance with the
conditions of this Law for the last time.
(3) A zone authority or a free port authority shall store the
contracts for the making of investments and for the settlement of
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 a 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 the Direct
Tax Reliefs
Publication of information on aid for commercial activity
provided within the framework of this Law by applying the 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. [1 September 2014; 3 July 2014 / See
Paragraph 17 of Transitional Provisions]
Section 14. Legal Basis for
Providing Aid
Within the framework of this Law, aid shall be provided in
accordance with Chapter III, Section 1 "Regional Aid" of
Commission Regulation (EU) No 651/2014 (published in the Official
Journal of the European Union L 187/1, 26.6.2014), as amended by
Commission Regulation (EU) No 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, 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
European Union L 270/39, 29.7.2021).
[3 March 2022]
Transitional Provisions
1. Until 30 April 2004, construction services provided to a
zone capital company or a licensed capital company, a free port
authority or a zone authority by a person taxable with the value
added tax in the free zone shall be taxable with the zero per
cent rate of the value added. The zero per cent rate of the 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 a zone authority outside 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 the 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, a zone capital company and a
free port authority are entitled to apply the direct tax reliefs
provided for in Sections 6, 7, 8, 9, 12, and 13 of this Law to
such investments that have been made by 31 December 2035
(inclusive) and wage costs settled by 31 December 2024
(inclusive) by not exceeding the permissible the State aid
intensity laid down in this Law and the contract for the making
of investments or for the settlement of estimated wage costs for
the accumulated direct tax relief ratio against the accumulated
sum of eligible costs.
[14 May 2020]
7. [3 July 2014]
8. [4 April 2013]
9. Until 31 December 2003, a zone capital company or a
licensed capital company which pays the immovable property tax
for buildings and structures shall calculate the sum 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 a 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 up to 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 a 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 the making of 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 a 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 interest
rate of the accumulated investment amount applicable to the
capital company determined in the contract is reached.
[4 April 2013]
16. Amendments shall be made to the contracts for the making
of investments concluded until 30 June 2014 by determining the
maximum amount of the 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 the making of 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 the
making of 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 issue the regulations referred to in
Section 8, Paragraph nine of this Law by 31 December 2020.
[14 May 2020]
20. The provisions of Section 2.1, Paragraph two of
this Law shall be applicable to the contracts of zone capital
companies and licensed capital companies for making investments
or for the settlement of the estimated wage costs in the
territory of the zone or free port that are concluded with a zone
authority or free port authority starting from the day when
Section 2.1, Paragraph two comes 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 that the
notification requirement laid down in Article 11 of Commission
Regulation No 651/2014 is complied with in relation to the
application of the State aid in the form of direct taxes for the
newly created workplaces as a result of initial investments to
the Liepāja Special Economic Zone.
[13 May 2021]
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
[19 December 2006]
Within the meaning of this Law, ship building sector capital
companies are capital companies, which perform:
1. Ship building, repair or reconstruction, where:
1) the ship building is the building of self-propelled
seaborne trade ships;
2) the ship repair is the repair or renewal of self-propelled
seaborne trade ships;
3) the ship reconstruction is the reconstruction of such
self-propelled seaborne trade ships the gross tonnage of which is
not less than 1000 tons, on the condition, that the
reconstruction includes fundamental changes to the cargo plan,
hull, engine system or passenger accommodation;
4) self-propelled seaborne trade ships are:
a) ships the gross tonnage of which is not less than 100 tons
and which are utilised for the carriage of passengers and/or
goods;
b) ships, which provide special services (for example,
dredgers and ice-breakers) the gross tonnage of which is not less
than 100 tons;
c) tugs the capacity of which is not less than 365 kW;
d) fishing vessels the gross tonnage of which is not less than
100 tons;
e) the unfinished hulls of the ships referred to in Clauses
"a", "b", "c" and "d" of this Paragraph, which are floating and
movable;
5) a self-propelled seaborne ship is a ship which, by using
its propulsion and control, has all the characteristics in order
that it may be suitable for independent navigation at sea.
2. The ship building, repair and reconstruction of warships
(ships, which in accordance with their construction
characteristics and abilities are specially intended for
utilisation only for military purposes, for example, warships and
other ships for attack or defence) and other ships intended for
utilisation for military purposes, on the condition, that the
activities performed on such ships are not hidden activities,
which are performed for the benefit of trade ship building.
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 the Making of Investments
[3 July 2014; 1 March 2018; 14
May 2020; 3 March 2022]
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 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. In relation to other made and completed initial investment
projects of the capital company for the implementation of which
aid was received, including de minimis aid, 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 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 percentage 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 the making of 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, Paragraph four and Paragraph 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 as of 31
December 2019 but became capital companies in difficulty during
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 the making of an investment.
21. If within the scope of this Law tax reliefs are planned to
be cumulated with other aid to investments, 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 the making of 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 Estimated Wage Costs
[14 May 2020; 13 May 2021; 3
March 2022]
1. Name, registration number, taxpayer registration number and
contact information of a zone capital company.
2. A 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 amount of estimated wage costs (EUR).
8. The start and end dates of estimated wage costs.
9. The following information shall be provided in respect of
the sums of eligible costs (initial investments or estimated wage
costs) settled by a zone capital company during the last three
years for which the zone capital company has received aid and
also the planned 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 (EUR);
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 percentage for the application of tax
reliefs for 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 a zone capital company at the time of submitting
the project application as laid down in Annex I to Commission
Regulation No 651/2014 (large, medium-sized or small capital
company).
12. 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 indicator over
the previous 12 months, and that the workplace is ensured by a
capital company at least within three years after completing
initial investments by considering that the declared place of
residence of the employee is located in the Latgale Planning
Region in respect of a Rēzekne Special Economic Zone and Latgale
Special Economic Zone capital company, but in respect of a
Liepāja Special Economic Zone capital company - in Liepāja local
government, Dienvidkurzeme municipality, or Alsunga rural
territory of Kuldīga municipality included in the Kurzeme
Planning Region, and the workplace will be 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.
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 works on the
project in conformity with that laid down in Section 1, Paragraph
two, Clause 12 of this Law would be commenced only after entering
into effect of the contract for the settlement of estimated wage
costs.
15. Taking into account the restrictions on the types of
economic activity laid down for zone capital companies in Section
5, Paragraphs four, 4.1 and 4.2 of this
Law, estimated wage costs within the scope of an investment
project shall be determined for zone capital companies with the
type of economic activity in conformity with NACE - 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 as of 31 December 2019 but became capital companies in
difficulty during the time 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 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 © 2022 Valsts valodas centrs (State
Language Centre)