Page 34 - Central and Eastern European Transfer Pricing Review

34 | CEE Transfer Pricing Review

Latvia

KPMG's Views on Transfer Pricing in Latvia

As of 1 January 2013 current legislation requires a written transfer pricing
study with specifc information included, if a taxpayer s annual net turnover
exceeds 1 million Latvian lats (LVL) and intra-group transactions undertaken
exceed LVL10,000.

Basic information What is the statute of limitations The taxpayer also must show in the
on assessment of transfer pricing corporate income tax return the
Tax authority name adjustments? amount where its Latvian-related
Valsts ienemumu dienests. Transfer pricing adjustments and a party has increased its taxable
penalty can be applied by the tax income for non-compliance of arms
Citation for transfer pricing rules length principle, if any.
authority for the previous 5 years
The Latvian law on taxes and duties starting from the corporate income
sets the requirement for particular tax return payment date. What are the consequences
taxpayers in preparing transfer pricing of failure to prepare or submit
documentation. It lists the information disclosures?
that must be included in the transfer Transfer pricing A penalty can be applied for late fling
pricing documentation. General transfer disclosure overview of a tax return varying from 50 500
pricing rules are set out in the Latvian Are disclosures related to transfer Latvian lats (LVL). If no return is fled,
law on corporate income tax. The related pricing required to be prepared or the maximum penalty can be applied
Cabinet of Ministers regulations No. submitted to the revenue authority LVL500.
556 of 21 December 2009 provides the on an annual basis (e.g. with the
methods to be used when determining tax return)? Transfer pricing study
arms length prices. The tax legislation in
Latvia allows the use of OECD Guidelines Yes. An entity is required to submit overview
when choosing a transfer pricing method. disclosures on transfer pricing to the tax Is preparation of a transfer pricing
authority through the annual corporate
Effective date of transfer pricing income tax return. study required i.e. can the
taxpayer be penalized for mere
rules
What types of transfer pricing failure to prepare a study?
1 April 1995 in general. 1 July 2006 for information must be disclosed? Yes, for certain transactions. If the
transactional net margin method and annual net turnover of a Latvian
proft split. 1 January 2013 for transfer Along with the annual corporate income resident or a non-residents permanent
pricing documentation requirements tax return, the following information establishment in Latvia exceeds
and APAs. must be submitted:
LVL1 million and the intra-group
the name of the related party to the transaction value exceeds LVL10,000,
What is the relationship threshold transaction
for transfer pricing rules to apply they are required to prepare a
between parties? the registration number and country full transfer pricing study. The
Ownership of greater than 20 percent, of registration tax authority will determine the
transaction prices based on its own
based on voting power, share capital and the transaction type and amount information if a transfer pricing study
is under common control.
the transfer pricing method applied cannot be submitted upon request.
the amount for which taxable
income is increased, if any.

© 2013 KPMG Central and Eastern Europe Ltd., a limited liability company and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.