Government agrees on tax and credit support measures for companies affected by Russian sanctions

To help Latvian entrepreneurs overcome the consequences of the embargo on the import of goods imposed by the Russian Federation, the Cabinet of Ministers decided at its meeting on August 12 of this year on state support for companies affected by the sanctions.

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Cabinet decision provides for granting state support to those merchants whose share of sanctioned export transactions to Russia is greater than 101% of the total sales volume.

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Relief is also intended to be granted to taxpayers whose activities are related to the export and production of goods subject to sanctions in the amount of at least 10% of the total sales volume, or the supply of raw materials to the above-mentioned companies, if, as a result of the sanctions, supply or service contracts are terminated or the purchase (supply) price of the goods or services is reduced.

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The government decision also provides for specific tasks for ministries so that relief measures can be applied to support companies affected by the embargo as soon as possible.

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The Cabinet decision stipulates that the Ministry of Economics (ME) will prepare amendments to the regulations on guarantees to improve the competitiveness of merchants and relevant agricultural service cooperative societies within two weeks, providing for the granting of credit holiday guarantees for up to 1 year to merchants suffering from Russian sanctions. At the same time, we encourage merchants to use the currently available support instruments of the Latvian Guarantee Agency and Altum (more:http://www.lga.lv/index.php?id=4 and http://www.hipo.lv/lv/attistibas_programmas/ ).

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In accordance with the Cabinet decision, the Ministry of Education will make amendments to several EU fund support programs, providing additional funding to continue supporting Latvian businesses in entering foreign markets and implementing measures to promote the sale of Latvian products and services abroad until December 31, 2015. In addition, the application of support will focus on the longer presence of industry experts in the target country (2-3 months) to facilitate the establishment of new contacts for the sale of Latvian producers' products.

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The Ministry of Finance will have two weeks to prepare amendments to regulatory enactments, providing for the introduction of tax support measures.

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In turn, the Ministry of Agriculture (MA) will have to make changes to regulatory enactments to ensure that fishing and aquaculture product processing companies also receive support for loan guarantees and loan subsidies. It is also planned to create more favorable conditions for businesses operating in the dairy processing sector. The Ministry of Agriculture will also have to prepare proposals for the necessary funding to support the dairy sector within two weeks.

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The government decided that, if necessary, in cooperation with other European Union member states, The Ministry of Agriculture will have to apply to the European Commission with a request to decide on the revision of the levy on the exceeded state milk quota, as well as to temporarily restore export compensation, activate intervention purchasing and private storage support.

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In order to mitigate the impact of sanctions on the road transport sector, the Ministry of Transport will have to coordinate with the European Commission amendments to the Vehicle Operation Tax and Company Light Vehicle Tax laws to abolish vehicle operation tax for vehicles with a gross vehicle weight over 3,500 kg.

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It is planned that the Minister of Economics will inform the Cabinet of Ministers once a week about the current situation and the implementation of tasks.

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Source: Ministry of Economics