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B. NATIONAL ENTERPRISES WITH BRANCHES OR SUBSIDIARIES ABROAD

It will be remembered that Latvian enterprises with establishments or branches abroad are not liable in respect of the profits earned by the latter.

In determining the share of foreign establishments in the general results of the enterprise, the principle followed is the same as that applying to foreign enterprises when taxed by the method of separate accounting.

When the empirical method is used, the coefficient is applied not to the total turnover, but only to the turnover of the head office and establishments situated in Latvia.

The position is different if the national enterprise has not a branch, but a subsidiary abroad. The profits paid to it by the subsidiary are dividends — i.e., capital yield ; and this income is liable to tax if it accrues to taxpayers whose fiscal domicile is in Latvia.

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