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Latvia: Transfer pricing documentation; focus on Master and Local files

Latvia: Transfer pricing documentation

New requirements for transfer pricing documentation apply with respect to related-party transactions conducted during the reporting year beginning 2018. Latvian taxpayers will be expected to prepare transfer pricing documentation pursuant to the recommendations of Action 13 of the OECD’s base erosion and profit shifting (BEPS) project—namely, country-by-country reports, Master files, and Local files.

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Latvian residents and permanent establishments that enter into transactions with a related foreign entity, with an individual who is related to the entity, or with entities or persons located or established in “low tax” or no tax jurisdictions (offshore companies) must prepare and submit transfer pricing documentation to the tax authority within 12 months of the end of the relevant reporting year. For transfer pricing documentation purposes, the requirements include the preparation of: 

  • Country-by-country reports—read TaxNewsFlash 
  • Master files (provided certain thresholds or conditions are met, such as the total value of controlled transactions and the taxpayer’s annual turnover)
  • Local files (again, if certain thresholds or conditions are met)

In some instances, the taxpayer will need to submit the Local file within 90 days of a request made by the tax authority. The 90-day submission period may be extended by 30 days in certain cases.

 

Read a May 2018 report prepared by the KPMG member firm in Latvia

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