Global Daily Tax News, Latvia Drafts Corporate Income Tax Law Amendments, (Sep 10, 2026)

Latvia's Ministry of Finance has drafted corporate tax law amendments that are intended to prevent double taxation.

The Ministry said the legislation, submitted for public consultation, will feature a new definition of the term "dividends" to avoid double taxation of amounts from liquidations and corporate share buy-backs.

Further, the law will clarify the ability of taxpayers to make compensating adjustments, where the transfer price for a related-party transaction is adjusted, also to avoid double taxation.

Changes are also planned for conditional dividends. In the future, deferred corporate income tax payment on conditional dividends would be made at the moment when the taxpayer's share capital is reduced or ceases to exist as a result of the reorganization.

Other amendments would seek to avoid double taxation from occurring in relation to employee share schemes. In addition, the excess interest expense deduction rules will be eased, to provide relief to financial intermediation services providers in particular, the Ministry said.

The draft law also aims to clarify the application of corporate income tax to social enterprises, taking into account the changes planned to the Social Enterprises Law from January 1, 2027.