The tax was implemented in Latvia in conformity with European Commission guidelines and has been in effect since Jan 1, 2007. The Energy Tax Legislation and Cabinet Laws govern the processes for the implementation and management of levies, prices, and the awarding of revenue exemptions and relaxation.
Within 20 days after the completion of the fiscal time frame, the tax statement must be filled out and filed with the Nation Tax Department. By the 23rd of the month, the expected tax must be forwarded to the particular tax account.
The power tax rate is LVL 0.71 per MWh. The market law specifies the processes for taxing energy in Latvia through the utility tax. This Rule applies to individuals involved in the creation, allocation, delivery, and sale, as well as other electricity-related operations. These Rules do not apply to self-sufficient manufacturers who create and utilize power for their use. However, only if they fulfill the following criteria:
- The overall electricity production does not surpass two mw/h of power, and
- Electricity goods subject to excise taxes are employed for further production.
Power sources provided to an end consumer, in addition to energy provided for personal consumption are taxed.
Taxpayers are those who deliver power to target consumers and have signed into distribution agreements. Also, independent manufacturers if they only generate two megawatts of energy from taxable resources.
The following situations or instances offer reprieve and deduction from the current tax.
The power produced by renewable fuel reserves and hydro dams will be tax-free. Currently produced in combined electric stations that meet the performance standards stated in legislation is also tax-free.
Energy used to generate both heat and electricity resources will be tax-free. The benefit is offered if the electricity is produced for the intention of transporting commodities and travelers, such as train services in cities.
Currently provided by delegates or institutions from other EU member countries in correlation with political or diplomatic ties is not subject to taxation. Power consumed by foreign institutions and participants of such institutions in conformance with the establishments’ contracts may also be excluded. Finally, voltage created and provided for the military services of any North Atlantic Treaty participant, as well as for usage under pacts with foreign nations, is eligible for relief.
The tax on power provided to individuals for the availability of street lighting facilities is determined at the LVL 0 per mw/h basis.
Calculations and payment of tax
A consumer must account for power production, circulation, delivery, and other electricity-related tasks. In Latvia, the revenue period is one calendar month. An individual must pay the energy tax determined during the fiscal time frame. When determining the levy, the taxpayer must subtract the consumption that is tax-free if the exclusions apply to him.
An independent manufacturer who does not meet the given standards must pay the tax estimated within 25 days of the conclusion of the revenue timeframe. A taxpayer must pay the levy on the amount consumed for individual use, excluding energy used solely for energy production.
Violation of tax law
In governmental ordinances, the responsibility for breaches of this Legislation is clarified. It is illegal in Latvia to deliver the product without paying the tariff. If such energy is given for which no levies are paid, the State Program collects the unpaid tax and charges fines.
The Federal Tax Agency must determine the tax based on the rate in effect on the day the applicable activities were conducted. A taxpayer is forbidden from providing or distributing the product to an individual who cannot receive any tax benefit or relaxation.