On 25 October 2018 the Parliament approved amendments to the law ‘On taxes and duties’ which introduce in Latvia the OECD format of the transfer pricing documentation. The law was published on 14 November 2018 as the official Gazette no 225.21/2018.

Transfer pricing documentation will be mandatory for Latvian companies and permanent establishments in Latvia of foreign companies that enter into transactions with (1) a related foreign entity; (2) natural persons related to the entity; (3) entities or persons if they are located, setup or established in low tax or tax free countries or territories (offshore companies).

Taxpayers resident in Latvia are required to submit Master file electronically 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 and controlled transactions exceeds EUR 5 million. 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 do not exceed EUR 15 million but exceed EUR 5 million and revenue is below EUR 50 million.

A Local file is required to submit electronically 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.

Where the tax payer enters into transactions with a Latvian related party and if the total amount of controlled transactions in the year exceeds EUR 250 thousand. In such cases, it will be possible to submit the Local File in 90 days after an SRS request possibility to extend for 30 days.