Bolt fined €1.4 million for tax evasion in Latvia
Estonian transport-on-demand company Bolt has been fined has fined €1.4 million for non-payment of corporate income tax (UIN) by the Latvian State Revenue Service (VID). This is the second time Bolt ghas been penalized for tax evasion in Latvia reports the country's state broadcaster LSM.
Bolt, which was previously known as Taxify, entered the Latvian market in 2016, when, according to LSM, problems with the Latvian tax authorities started immediately. Cooperation between the company and the Latvian tax office was said to have improved since then.
However, according to the Latvian tax office, an audit revealed that Bolt had failed to pay €922,000 in corporate income tax, plus around €500,000 in arrears and fines. According to Latvian television, Bolt has previously been fined around €200,000 for a similar offence, which is still subject to an ongoing investigation.
A statement made by Bolt said, that the company had filed an appeal against the decision, seeking clarity on the way corporate income tax is calculated in light of existing tax agreements between Latvia and Estonia.
"All taxes claimed by the State Revenue Service have been paid by Bolt. There are differences in views on the question of how exactly the corporate income tax should be calculated, taking into account the tax agreement between Estonia and Latvia. The appeal has been filed in court for clarification on the applicable methodology," said the statement.
The Latvian tax office's decision also highlights ways different companies are treated differently, depending on the types of business practices they are involved with. Russian company Yandex, for instance, recently exited the Latvian market without paying a cent of corporate tax, and is not expected to face fines from the Latvian tax authorities.
According to Latvian lawyer Jānis Taukačs, a foreign company that does not want to pay income tax in Latvia should avoid having a physical presence in the country in the form of an office or other premises. According to Taukačs, this also relates to permanent sales staff in the country, pointing to the examples of accommodation providers AirBnb and Booking.com, neither of which have employees based in Latvia.
The OECD and the European Union are currently trying to conclude a global company tax agreement, under which digital services would be taxed in the countries where the revenue is generated. Under the agreement, this would be the case even in situations where the company providing the service does not physically have employees on the ground in the country where it earns revenue.
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Editor: Michael Cole
