Changes approved by the Cabinet of Ministers on 11 August 2009, but not yet adopted by the Saeima:

• Equal tax regime to all residents of EU and EEA for calculated interest

The amendments to the law provide to retain the thin capitalization rules and to apply these rules to residents as well. The amendments to the law also provide for a wider range of subjects who will not be required to assess the loan interest according to these criteria, i.e., the restrictions shall not apply to interest for loans received from a financial institution, which:

1) is a resident of Latvia or another country of the EU or EEA, or a resident of a country that has entered into a convention on double taxation prevention and tax avoidance with Latvia, if such convention has taken effect;

2) provides loans or financial leasing services and is monitored by the credit institution or financial sector supervisory body of the relevant country.

The planned changes shall apply as from the taxation period commencing in 2010.

These will allow the private partner of a private-public partnership (PPP) to write off in equal parts the long-term investments into the fixed assets of the public partner transferred by the PPP agreement in the period specified in the agreement (currently, the law does not allow to recognise investments into the fixed assets of the public partner as business expenses, unless the private partner and public partner have concluded an agreement about tenancy of the fixed assets and the procedure of investments has been specified in the agreement.)[i1] 

The Ministry of Finance of Latvia Has Prepared Amendments to the Law on Value Added Tax. It is planned that they will take effect on 1 October 2009:

• Registration of VAT payer's group allowed

Several companies of one concern will be allowed to form a VAT payers' group, submit a single VAT declaration to the State Revenue Service and not to apply VAT to intra-group transactions;

• Deduction of VAT of bad debts allowed

The right to deduct the VAT amount of the bad debt from the tax amount due;

• Special VAT procedure in import goods

If several conditions are met, the VAT for imported goods may be included in the VAT declaration for the respective year, instead of being actually paid into the state budget.