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Latvia Tax Reductions

All form of relief relates to the income of an individual who is a Latvian resident.
The following amounts are subject to the definition and ceilings in Latvian law:

Personal Relief	Comments
Personal deduction for a resident. Deduction for a dependant relative. Payments to an education authority and national insurance. Payments to an independent pension fund. Donations.	LVL LVL 32 a month LVL 22 a month. LVL 150 a month per person per annum and a similar amount for a dependant relative. Up to 10% of income, subject to the ceiling

BUSINESS DEDUCTIONS

In Latvia, in addition to the deductions/credits mentioned above, deductions and business expenses may be claimed as specified below:

Offset of losses: - A loss may be offset 5 years forward. It is not possible to offset a loss from previous years, Companies that operate in a free economic zone may offset losses 10 years forward.
Consolidated statements - in Latvia, a loss in one company of a group may not be set against a profit in another company in the group.
Financing expenses - interest on credit is allowable for tax. Nevertheless, the interest may not exceed 75% of profits, excluding interest.
Employer's voluntary contributions to pension and health funds are allowable to an amount of LVL 40 per employee per month.

Depreciation of Fixed Assets

The "double-declining balance" is the method of depreciation adopted in Latvia.

The rates of depreciation in Latvia:

Class of Asset	% Depreciation
Buildings and equipment	10
Computers and peripheral equipment	70
Road infrastructure and transport vehicles	10
Vehicles and ships	20
Goodwill	0
Patents	20 (straight line method)
Oil drilling equipment	15

Research and development expenses may be deducted entirely in the year of purchase

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