Amendments to the Law “On Taxes and Fees”

On 1 April 2025, the Cabinet of Ministers adopted amendments to the Law “On Taxes and Duties,” which are currently in the third reading in the Saeima. These amendments introduce several changes aimed at reducing the administrative burden and making the tax system more understandable for both entrepreneurs and the general public.

Unfulfilled tax obligations

Until now, the State Revenue Service (hereinafter – SRS) published information on tax debts exceeding €150, with some exceptions.

With the amendments entering into force on 1 July 2025, the scope of situations in which the SRS will no longer publish tax debts above €150 has been expanded. It will also apply when the payment deadline has been extended due to force majeure (Article 24, Section 1.7) or when a settlement agreement has been concluded in accordance with Article 41 of the Law (prior to a tax control assessment or audit decision). This means that taxpayers who cooperate in good faith with the SRS and have already agreed to the payment of their tax debts will not be publicly highlighted as debtors.

How will data exchange between the SRS and the Register of Enterprises change?

Previously, the SRS was obliged to maintain a list of risk addresses and a list of risk persons in accordance with the criteria set out in the Article 1, Clause 31 of the Law “On Taxes and Fees”, and to regularly provide this information to the Register of Enterprises of the Republic of Latvia (hereinafter – the Register of Enterprises). This procedure and the frequency of the submitted information are defined in an inter-institutional agreement.

The amendments do not change the core principles of cooperation between the SRS and the Register of Enterprises, but the administrative process is being streamlined and simplified. The SRS will continue to maintain the list of risk persons, but it will no longer be linked to a specific agreement with the Register of Enterprises. Since all regulations related to data exchange are already stipulated in the Law “On the Enterprise Register of the Republic of Latvia,” they will no longer be repeated in the Law “On Taxes and Fees.”

How is de minimis support for the fisheries sector changing?

Previously, enterprises in the fisheries sector facing financial difficulties due to the restrictions imposed by Russia Federation in 2014 could receive support through deferred tax payments or payment in instalments for up to five years.

Such specific sectoral support will no longer be available. The law amendments exclude all provisions that applied to this de minimis aid for taxpaying entities in the fisheries sector. However, these enterprises still have access to the general support measure – an extended tax payment deadline as defined in Article 24, Section 1.7 of the Law. This provision applies to all taxpayers whose activities have been significantly affected by the consequences of force majeure (including those linked to the armed conflict initiated by the Russian Federation in Ukraine).

What are the new rules for initiating tax debt recovery by the SRS?

Previously, under Article 26, Section 6.¹ of the Law “On Taxes and Fees,” the SRS did not initiate tax debt recovery if the total amount of tax owed was less than €15 (except for customs duties and equivalent payments).

The amendments introduce a new approach to tax debt recovery. In future, the SRS will only initiate recovery if the amount of the debt exceeds the costs associated with recovery. This means that no specific threshold will be set, and it will depend on the actual costs required to execute the recovery process. The SRS has calculated that, currently, the average cost of one undisputed debt recovery process is approximately €38.67. It is expected that if these costs increase in future, the SRS will publish the updated cost estimate, which will become the new threshold without requiring changes to the legal provisions. This approach will allow for more efficient use of state resources and avoid situations where recovery costs exceed the debt itself.

At the same time, in cases involving real estate tax debts, the previously established threshold remains, and recovery will still be initiated if the debt exceeds €15.

How will the calculation of late payment interest change from 2026?

Until now, late payment interest was calculated for each day of delay, which often caused confusion and complaints from taxpayers. The interest accrued daily, and the sum could change even due to a single day’s delay. Moreover, this method of calculation demanded significant IT system resources, which were disproportionate to the amount of late payment interest collected.

The amendments, which are set to enter into force on 1 January 2026, stipulate that late payment interest will be calculated only twice per month – on the 1st and 15th of each month. This will make the system more transparent and allow taxpayers to better understand how their late payment interest is accumulating.

Furthermore, additional interest will not be calculated if the payment is received by the end of the relevant month or by the next interest calculation date. This also applies to cases where a declaration is amended or submitted after the deadline, but there was already a sufficient payment in the unified tax account to cover the corresponding tax, which has not been used to settle other obligations.

It is also important to note that the previously applicable five-business-day period, during which no late payment interest was calculated, will no longer apply to tax payments that must be paid into the unified tax account.

Additionally, Article 29 is supplemented with Section 3.¹, which provides that if the payment due date falls on a weekend or a public holiday, the next working day shall be considered the payment date. This also takes into account the practice of shifting working days that fall between weekends and public holidays – e.g. to a Saturday, where a working day is legally designated as a public holiday but a weekend day is designated as a postponed working day.

How is the SRS expanding its powers to monitor and block e-commerce domains?

Previously, the SRS could block or request the shutdown of a domain name only for Latvian domains ".lv". This limited the ability to combat tax evasion and non-compliance using foreign domains, such as ".com" or ".net".

Now, the SRS will be able to restrict user access to any domain or IP addresses within the territory of Latvia, regardless of the country in which the domain is registered. This will enable faster and more effective action to stop the operations of entrepreneurs in Latvia who evade local regulations and tax obligations.

How will electronic working time tracking change at construction sites from 2026?

Until now, building authorities and institutions performing building authority functions used the unified electronic working time recording database (hereinafter - VEDLUDB) to ensure the control of construction specialists’ duties.

The amendments, entering into force on 1 February 2026, provide that VEDLUDB will be used not only to monitor construction specialists but also to oversee the activities of construction companies. Employers – including natural persons and branches of foreign businesses – will be required to indicate in VEDLUDB the taxpayer registration code assigned by the SRS. Additionally, construction initiators will be required to provide further identification details (name, surname, and the code assigned by the SRS, if available).

A significant novelty is that subcontractors and employees will have the ability to access their recorded working hours at construction sites electronically. The main contractor will also be required to submit data on the registry numbers of subcontractors and the contract numbers, regardless of the contract value. They must also ensure that workers can view the data accumulated in VEDLUDB about themselves electronically.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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