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(b) Interest

What was said above about dividends applies also to interest on Latvian bonds which the enterprise holds without having an establishment in the country, and to bond interest of any origin if the bonds belong to the portfolio of an establishment in Latvia.

Interest on Unsecured Loans. — As already mentioned, capital-yield tax is imposed, not only on income from Latvian securities, but on interest from deposits, current accounts, etc., with public enterprises or banks in Latvia.

Accordingly, any interest paid to a foreign enterprise under this head will always be liable to tax on income from capital, whether the enterprise has an establishment in the country or not.

Interest derived from Latvia is only taxable if it is among the receipts of an establishment situated in the country. In this case, it will be liable to income-tax, like all other interest accruing to such establishment, including interest on which the tax on income from capital has already been paid.

Interest on Secured Loans. — The fact that a loan is guaranteed by a security situated in Latvia is of no importance from the fiscal point of view, so that what was said with reference to unsecured loans applies here too.

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