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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Latvia Phase 2 report

This report for Latvia has been published on 30 Oct 2015. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.   Ownership information on foreign companies having sufficient nexus with Latvia (in particular, having their head office or headquarters in Latvia) is not consistently available.  Latvia should ensure that ownership information on foreign companies with sufficient nexus with Latvia (in particular, having their head office or headquarters in Latvia) is available in all cases. 
Phase 2 Rating Factors Recommendations
Compliant.  Availability of information on settlors and beneficiaries of foreign trusts is based on interpretation by the Latvian authorities and there is no basis to confirm it.   Latvia should monitor the availability of information on settlors and beneficiaries of foreign trusts operated by Latvian resident trustees to ensure that such information is practically available. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The provision of banking information under treaties which do not specifically provide for exchange of foreseeably relevant information is subject to restrictions which are not in line with the standard. Consequently, banking information cannot be exchanged in line with the standard with 16 out of Latvia’s 99 EOI partners.  Latvia should ensure that its competent authority has access powers in respect of banking information requested by all its EOI partners. 
Latvian law protects all information obtained by the legal representative in connection with providing legal services without appropriate restrictions.   Latvia should ensure that the scope of the attorney-client privilege as provided in domestic law is consistent with the international standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Amendment of the Latvian law in respect of access to banking information under EOI instruments which provide for exchange of foreseeably relevant information came into force only in August 2015 and remains to be tested in practice.   Latvia should monitor implementation of the amendment of the Credit Institutions Law so that all banking information as requested by its EOI partners can be provided in line with the international standard. 
Although the requested information was in the vast majority of cases obtained directly by the Latvian Competent Authority it appears that the tax authority is hesitant to use all its information gathering powers including tax audits and compulsory measures in order to obtain information requested for exchange of information purposes.  Latvia should monitor use of its access and compulsory powers so that the requested information is effectively obtained in all cases.  
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   As a result of domestic law limitations with respect to access to banking information Latvia does not have EOI relations in force providing for effective exchange of information to the standard with 16 out of Latvia’s 99 EOI partners.   Latvia should ensure that all its EOI relations provide for exchange of information to the standard. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Latvia should continue to develop its exchange of information network with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Although domestic confidentiality rules allow disclosure of information which goes beyond the standard the received information is not clearly marked as obtained under an international treaty and therefore may be used not in line with the standard.   Latvia should take measures to ensure that the received information is in all cases treated in accordance with the respective treaty under which it was obtained.  
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Latvia’s EOI agreements do not define the term “professional secret” and the scope of the term under its domestic laws is wide and goes beyond the international standard.  It is recommended that Latvia limits the scope of “professional secret” in its domestic laws so as to be in line with the standard for exchange of information. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.  Latvia has in place appropriate organisational processes. Nevertheless there appear to be room for improvement in terms of resources dedicated to exchange of information practice. The workload does not currently lead to significant delays in exchange of information however it has negative impact on Latvia’s ability to systematically provide status updates and may lead to delays or drop in quality of responses where more requests will need to be handled.   Latvia should take measures to ensure that appropriate resources are put in place so that it continues to provide information in a timely manner and, in cases where the information is not provided within 90 days, it updates the requesting competent authority on the status of the request in all cases.