Latvia announces to implement pillar two minimum tax rules partially


Latvia’s Ministry of Finance announced it had finalized a draft legislation for partially implementing the Pillar 2 global minimum tax (GloBE) rules as per Council Directive (EU) 2022/2523 of 14 December 2022.

The partial implementation introduces certain related reporting requirements but excludes the income inclusion rule (IIR) and undertaxed payment/profit rule (UTPR) because Latvia has decided to postpone the enforcement of these laws.

As allowed by the Directive, Member States in which no more than twelve ultimate parent entities of groups within the scope of this Directive are located may elect not to apply the IIR and the UTPR for six consecutive fiscal years beginning from 31 December 2023. Member States that make such an election shall notify the Commission by 31 December 2023.

Where the ultimate parent entity of an MNE group is located in a Member State that has made this election, the other Member States other than the one in which the ultimate parent entity is located shall ensure that the constituent entities of that MNE group are subject, in the Member State in which they are located, to the UTPR top-up tax amount allocated to that Member State for the fiscal years beginning from 31 December 2023.



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