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Tax Amnesty in Latvia

9 May 2011
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Latvia: The Income Legalization of the individuals

In the meeting of Secretaries of State the Ministry of Finance of the Republic of Latvia announced for official harmonization between the institutions of State administration the Conception of the legalization of the income of the individuals. The declaration of the previously not declared income of individuals and payment of the appropriate personal income tax is offered to perform at the same time with the establishment of the Zero declaration - in the beginning of year 2012.

In the plan of combating the hidden economy, what is already accepted by the Cabinet of Ministers of the Republic of Latvia, one of the arrangements what has to be established on the same time as the Zero declaration, was mentioned the chance for the persons, who have avoided tax payments, to cover the caused losses to the State related with not paying the taxes.

The Ministry of Finance proposes to the Government to support one of the two options:

  1. the individual from January 1, 2012 till April 1, 2012 shall declare so far not declared income, shall pay the personal income tax rate, late charge and penalty and shall not be released from administrative and criminal liability.
  2. the individual from January 1, 2012 till April 1, 2012 shall declare so far not declared income and shall pay personal income tax rate of 10%. The late charge and penalty shall not be calculated and the individual shall be released from administrative and criminal liability for hiding the income and for not submitting the declaration of personal income tax. However the individual shall not be released from criminal liability for legalisation of unlawfully obtained financial means or other belongings.    

After the term of the legalization - April 1, 2012 - all revealed income of the individuals, what have been gained till December 31, 2008 and what were not declared in the framework of the legalization of the income, shall be applied with the personal income tax rate 25%, plus shall be calculated the late charge  0,07% and penalty according to the provisions of the Law on Taxes and Fees. Moreover, the State Revenue Service shall be entitled to examine the legality of the derivation of so far not declared income.

Taking into account the experience of Foreign States establishing similar events, the positive influence to the State budget is expected in the implementation occurence of the Conception.

The representative of the Ministry of Finance indicates, that the target of the Conception is:

-          return the Public money, what residents possess in the low-tax or tax-free countries,

-          to return the money to registered company, what is used for non-registered transactions,

-          to enable the taxpayers to fulfill the obligations to the State,

-          to encrease the tax revenue in the State budget.

If the Cabinet of Ministers shall support the principle of the legalization of income, the Ministry of Finance jointly with Ministry of Justice shall prepare and till July 1, 2011 shall submit appropriate proposals to the Saeima (Parliament of the Republic of Latvia) for the Draft of the Law „ On declaration of the economic situation of the Individuals” for second or third reading. 


Valters Gencs

Tax Attorney & Founding Partner

Gencs Valters Law Firm, Riga

Email: Tel: +371 67 24 00 90

For questions, please, contact Valters Gencs, attorney at law at

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The material contained here is not to be construed as legal advice or opinion.

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