Registration of Value Added Tax (VAT) taxable persons at the State Revenue Service (SRS) is governed by the Law on Value Added Tax listing VAT taxable transactions and their taxable value, as well as by the Cabinet Regulations No. 933 “Procedures for the Application of Provisions of the Law on Value Added Tax” adopted on 14 November 2006.
Registration procedure
• In order to be registered as a VAT payer by the State Revenue Service, the tax payer must submit an application to the State Revenue Service upon presentation of a personal identification document or drivers license, or a relevant authorization, if the application is submitted by an authorized person.
• After assessment and inspection of the application and completion of other measures, the SRS makes a decision on registration of the tax payer in the Register of VAT taxable persons within 10 days.
• The SRS is entitled to obtain information on companies, inspect manufacturing facilities, ask for information on the company’s key partners, nature of its operations, etc.
• The documents necessary for registration by the SRS in the Register of VAT taxable persons may be submitted to any customer service centre of the SRS electronically by using a secure e-signature or to any regional department of the Register of Enterprises upon registering the company.
Refusal of registration
The SRS is entitled to refuse the registration, if an applicant cannot be reached at his or her declared place of residence or company’s registered address, has not given the necessary information upon request by an employee of the SRS or has given false information on his or her material, technical and financial possibilities to perform economic activities. The decision on refusal of registration in the Register of VAT taxable persons can be contested within 30 days by submitting a written application to the customer service centre which the decision was made at. An applicant may improve the registration application and resubmit it to the SRS.
Acquiring the status of a VAT payer
Taxpayer becomes a VAT payer starting from the date on which the decision is made. As of that moment, the VAT is imposed on all transactions made by this person, and the rights to deduct the input tax are obtained starting from this date.
A taxpayer is notified of the decision on registration in a way of his or her own choosing – either by sending a written decision via mail or by publishing the fact of registration on the webpage of the SRS: www.vid.gov.lv.
– If a person is notified of the decision via mail, registration is considered to be completed on the seventh day after the transfer of such decision to the post office.
– If the information is published on the webpage of the SRS, a person is considered to be registered in the Register of VAT taxable persons on the next day after the announcement of such decision. The webpage of the SRS also provides information on counterparties, thus ensuring the possibility to find out whether they are VAT taxable persons or not.
Important for VAT registration
Person must register as VAT payer if the taxable income exceeds EUR 40,000 during the previous 12 months. A person has the right not to register in the Register of VAT Taxpayers, if this taxpayer has purchased goods within the territory of the European Union exceeding the registration threshold of EUR 10.000 at least once, but does not intend to purchase other goods in the territory of the European Union in the next calendar year, the total value of which could exceed EUR 10.000.
VAT rates
VAT rate imposed on goods and services is 21 % out of the total transaction value. The reduced rate is 12 %. The goods and services which the reduced rate is imposed upon are listed in the Article 62 of the Law on Value Added Tax.
The registration is voluntary if the taxable income is less than EUR 40.000. The benefit of this requirement is that the VAT paid can be deducted as input tax when purchasing goods and services. It means that the amount of the input tax paid by the taxpayer when purchasing goods and services to secure the taxable transactions may be deducted from the amount to be paid in the budget for the completed transactions.
Submission of declarations
From the moment of registration, a VAT payer must submit VAT declarations.
Taxation period of the tax is one calendar month if any of the following conditions is implemented:
1) the value of the taxable transactions made by a registered taxable person in the pre-taxation year or taxation year exceeds EUR 40 000;
2) a registered taxable person provides supply of goods in the territory of the European Union to which zero per cent rate is applied in accordance with Section 43, Paragraph four of this Law;
3) a registered taxable person provides supply of goods in the territory of the European Union, participating in the supply of goods referred to in Section 16, Paragraph four of this Law;
4) a registered taxable person supplies services the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law and the place of supply of which is another Member State;
5) a registered taxable person provides supply of goods to a warehouse in another Member State in accordance with Section 8.1 of this Law.
The taxation period of the tax shall be one quarter for a registered taxable person who does not conform to the conditions referred to in Paragraph one or two of this Section.
Selling of goods and services to the EU
Taxpayers delivering goods to the Member States of the European Union pay VAT every month. The first monthly taxation period is the month of starting deliveries to the European Union. In this case, the VAT is paid every month, as well as declarations are submitted every month till the end of the calendar year. The taxation period for the next year is set according to the value of taxable transactions in the previous calendar year.