Recently, the Latvia Cabinet of Ministers has approved a draft law for the introduction of Master and Local file requirements in line with BEPS Action 13.
Under the law, taxpayers resident in Latvia are required to submit Master file within 12 months following the end of the reporting fiscal year either exceed the controlled transactions of EUR 15 million or exceed the annual turnover of EUR 50 million in the reporting fiscal year. Master file is required to prepare within 12 months following the end of the reporting fiscal year and submitted within one month of request if controlled transactions exceed EUR 5 million in the reporting fiscal year but not more than EUR 15 million and turnover does not exceed EUR 50 million.
A Local file is required to submit within 12 months following the end of the reporting fiscal year if controlled transactions exceed EUR 5 million in the reporting fiscal year. Local file required to prepare within 12 months following the end of the reporting fiscal year and submitted within one month of request if controlled transactions exceed EUR 250,000 but do not exceed EUR 5 million.
In cases of non-compliance in respect of submission deadlines or incomplete documentation, a penalty equal to 1% of the value of the controlled transactions may be imposed, limited to a maximum penalty of EUR 100,000. The new documentation requirements are to apply to reporting periods from 2018 as proposed.
