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List of offshores in Latvia was changed
Latvia has updated the list of offshores this year, while leaving only 25 out of 65 states that were on the register earlier. You can find it and familiarize yourself with it here.
The list does not include Hong Kong, Belize, Seychelles, Singapore, Panama and other jurisdictions, because these jurisdictions are low-tax or tax-free ones.
In addition, the states that signed the international pact on information exchange (tax information exchange agreement) are removed from the list. That is why starting from the beginning of 2017 42 countries out of 65 officially listed were considered as offshores.
After the EU has approved the "black list" of offshore companies, it is considered that Latvia will use the same list as the European Union.
Tax legislation restricts offshores included in the list as follows:
- Taxpayers from Latvia withhold taxes from payments to offshore zones, if contributions reduce their taxable base. Rates: natural persons - 23%, companies - 20 (since 2018).
- Transactions with offshores included in the list are classified as transactions with related entities.
- Dividends from offshore enterprises are not exempt from taxes.
- Income received from the sale of shares to a foreign company is taxed if it is registered in an offshore zone.
- Profits coming from a permanent establishment, if it operates in an offshore country, are not exempt from taxation.
- If a natural person has more than 25% of shares (voting rights, equities, or other control) in an offshore company, profit of an enterprise that has not been distributed is recognized as an income of this individual.
