VID sets out settlement processing times by tax-dispute stage

Latvia's State Revenue Service, VID, gives different service times for concluding a tax settlement depending on the stage of the caseVID. During an audit before the assessment decision, its guidance gives a range from one month to 150 daysVID. For a notified tax control before the tax invoice is issued, the stated range is two to four monthsVID.

At the stage of contesting an audit decision or tax invoice, the service time is one monthVID. VID also states one month for a settlement after the Director General's decisionVID and during court proceedingsVID. These are presented as service times for concluding the agreement, so the relevant entry depends on where the taxpayer's case stands.

A settlement can reduce late-payment charges and, where applicable, penalties in return for voluntary payment under the agreement. The underlying unpaid tax remains payable. VID's guidance explains that the available reduction depends on the stage at which the agreement is concluded: earlier settlement provides a greater reduction under the applicable rules.

The guidance distinguishes a tax control, which examines a particular discrepancy, from a tax audit. A tax-control invoice generally comprises unpaid tax and late-payment charges. It identifies an exception for unlawful manipulation of cash registers, where the invoice contains a penalty that cannot be reduced or cancelled by agreement. An audit can result in both late-payment charges and penalties alongside the tax.

Payment under an agreement also depends on the taxpayer's status. Legal persons and individuals carrying on economic activity pay the agreed amounts within one year of signing, in proportionate monthly instalments. Individuals who do not carry on economic activity have two years, likewise paying proportionate monthly instalments.

If the agreed payment deadlines are missed, the agreement loses effect. VID says late-payment charges are then calculated under the general rules on the unpaid principal for the period of delay, and the overdue amounts are recovered. Taxpayers considering settlement therefore need to account for both the stage of the dispute and the payment schedule they will undertake.

The legal basis for the settlement conditions is section 41 of the law “Par nodokļiem un nodevām”.