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2. Apportionment of Expenses of Real Centre of Management to Branch

Interest Charges. — If the parent enterprise is to ascribe to its Latvian branch a part of its interest charges and if that interest is to be deductible from the profits taxable in Latvia, the debt must have been incurred in the interest of the branch or the yield of the loan made over to it. Such interest may be charged to the Latvian establishment in proportion to the benefit the establishment has derived from the borrowed capital.

General Overhead. — The above rule applies mutatis mutandis to general overhead. These expenses may be deducted from the Latvian profit if they were incurred on behalf of the establishment or if they were of benefit to it.

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