From 1 January 2013, dividends will not be taxed, thus Latvia will introduce and recognize a corporate structure. The exemption applies to residents and non-residents as well as to natural and legal persons not established in low-tax countries and territories. It is expected to facilitate business through Latvian companies and to limit offshore transactions.
Amendments to the Corporate Income Law provide that, as of January 1, 2013, dividend income arising from a transfer of shares is not taxable, for both resident and non-resident. However, these rules do not apply to countries and territories included in the offshore list.
As far as taxes are concerned, not all offshore areas are included in the list of low tax and free tax zones and territories for tax purposes. The list is set out in Cabinet of Ministers Regulations No. 276 adopted on 26 June 2001. Sixty-four countries and territories have recently updated regulations.
It is common practice in Europe to maintain a holding system. The new events will help Latvia to attract investors and promote the business environment.
Concerning holding companies, the frequency of dividend distribution, the holding period and the number of shares may play an important role. Latvian law does not impose any obstacles in this regard. The Latvian Corporate Income Tax Act does not expressis verbis require either the term of holding or the number of shares. Thus, Latvian law offers advantages over jurisdictions such as Cyprus, Germany or Malta.
Another advantage is the lack of special requirements for foreign entrepreneurs. For example, there are no barriers or restrictions for foreigners to be a director or to become a shareholder, ie citizenship or residence is not relevant. There are also no special requirements for using a Latvian bank account, and foreign bank accounts are allowed.
By the Latvian Company Law, dividends are paid annually based on a resolution of the shareholders.
Monday, April 6, 2020
Wednesday, April 1, 2020
Taxes in Estonia
The Baltic Sea Region is the fastest growing business region in Europe. Trade flows between countries in the region have steadily increased every year. The Estonian tax system is considered to be one of the most liberal tax systems in the world. Estonia implemented a comprehensive tax reform in 2000 to create the simplest, most understandable and convenient tax system possible. The main advantage of Estonia is the low tax system, which can be described as a simple system with no hidden surprises and was designed to promote entrepreneurship and increase profits.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Corporate income tax
As a result of the reforms, the main benefit for entrepreneurs was the exemption from corporation tax on reinvested profits. Thus, Estonian companies are subject to income tax only on distributed profits, ie dividends. The corporation tax (tax on distributed profits) is 21% of the gross dividend.
Value Added Tax (VAT)
VAT payers are businesses whose taxable supply (excluding imports) does not exceed EUR 16 000 per the calendar year. The tax is levied on transactions in goods and services in Estonia and on imports of goods. The tax rate is 20% of the taxable amount.
Personal income tax
The tax rate for 2010 is 21% of taxable income, and residents are required to pay tax on their income earned both inside and outside Estonia. Taxable income includes income from employment (salary, wages, bonuses and other benefits), business income, interest, royalties, rent, capital gains, maintenance benefits, pensions, scholarships.
Social tax
This tax is levied to provide state pension and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33% of the taxable amount. The tax must be calculated every month and the amount due must be paid no later than the tenth day of each month.
Land tax
The tax rate is between 0.1% and 2.5% of the taxable amount. The tax on land restricted to economic activities is set by the Estonian Government at 25%, 50% or 75% of the tax rate. Land tax is paid three times a year, through April 15, July 15, and October 15.
Subscribe to:
Posts (Atom)