Liepājas SEZ

According to the law of Liepaja SEZ, Liepaja Special Economic Zone was established on March 1, 1997 and it will exist until December 31, 2035. The purpose of the LSEZ is to develop business environment, manufacturing, shipping and air traffic, as well as international trade through Latvia

The aim of the LSEZ is to attract investment for expanding of manufacturing and infrastructure, and to create new work places and to ensure the development of the region.

According to the „Law of the Liepaja Special Economic Zone” there are following forms of performing business activities in the Liepaja SEZ territory:

1.

Operation receiving direct tax reduction by acquiring Liepaja SEZ company status;

2.

Operation receiving direct and indirect tax reduction by acquiring Liepaja SEZ and Free Zone company statuses;

3.

Operation in generally adopted order without acquiring Liepaja SEZ and Free Zone company statuses;

4.

Liepaja SEZ authority provides leasing out of territories and other properties managed by Liepaja SEZ Authority to the SEZ and other companies.

According to the “Law of application of taxes in free ports and special economic zones”, Liepaja SEZ and Free Zone companies companies are subject to direct and indirect tax rebates.

Direct tax rebates

Liepaja SEZ commercial company can receive these direct tax rebates:

1.

80% rebate on the applicable Corporate Income Tax (which makes the tax rate as low as 3%, as opposed to the standard tax rate of 15% in the country), and applies to all kinds of profits;

2.

80% rebate on the applicable Property Tax (which makes the tax rate as low as 0.3%, as opposed to the standard tax rate of 1.5% in the country), in addition to the fact that the real estate costs and, subsequently, taxes are comparatively low.

Direct tax rebates shall be applied under the condition, that the accrued direct tax volume combined with the calculated rebates in the taxation period, does not exceed the below mentioned applicable interest from the accrued investment sum by the particular company:

1.

SEZ company or licenced capital company, which does not comply with the criteria of the Annex I to EU Regulation 651/2014 (the category of micro, small and medium-sized enterprises (‘SMEs’) employing fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million) – subject to 35% from the accrued investment sum;

2.

SEZ company or licenced capital company, which complies with the criteria of the Annex I to EU Regulation 651/2014 (the category of medium-sized enterprises, employing fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million) – subject to 45% from the accrued investment sum;

3.

SEZ company or licenced capital company, which complies with the criteria of the Annex I to EU Regulation 651/2014 (the category of small enterprises, employing fewer than 50 persons and which have an annual turnover not exceeding EUR 10 million, and/or an annual balance sheet total not exceeding EUR 10 million) – subject to 55% from the accrued investment sum.

In order to qualify for the direct tax incentives, provided by the Law, the Special Economic Zone investors within the Special Economic Zone territory shall make their investments only after they have entered into an agreement with the Liepaja Special Economic Zone Authority.

Large investments (total investment volume exceeding EUR 50 million) shall be subject to special provisions.

Indirect tax reductions

The Liepaja SEZ companies, dealing with the non-EU commodities, may apply to the Free Zone Status. The territories of such capital companies shall be deemed free zones and the the companies shall be eligible to the free zone regime. i.e. an aggregate of tax incentives combined with specific customs control measures. Storage of goods within the free zone territory shall be subject to specific procedure, no customs declaration or warranty shall be required.

The Law provides the opportunity to operate under the free zone status, thus obtaining additional tax incentives, such as:

1.

0% rate of the Value Added Tax (VAT), applicable for virtually all supplies and services;

2.

excise tax and customs duty exemptions.