Regulatory enactments governing the application of import duties

Import duties shall be applied in accordance with the Common Customs Tariff laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (hereinafter - Regulation No 2658/87) on the Combined Nomenclature (CN).

Annex I to Regulation No 2658/87 shall be carried out annuallyamendments, published in the Official Journal of the EU by 31 October, applicable from 1 January of the following year.

Import duties shall mean:

1. customs duties and duties equivalent to customs duties (e.g. anti-dumping or countervailing duties) to be paid on importation;
2. import charges introduced within the framework of the common agricultural policy or under special arrangements applicable to certain processed goods of agricultural products (e.g. agricultural component, additional sugar duty and supplementary flour tax).

Anti-dumping duties

Anti-dumping dutiesgoods imported at dumped prices from third countries and whose free circulation in the Union causes injury may be applied. A product is considered to be a dumped product when it is exported to the Union at a price lower than the price of the like product in the ordinary trade operations in the exporting country.

Anti-dumping measures are directed against a specific product with a specific description and the country of origin of the goods or certain companies of the country of origin, such goods to producers.

Anti-dumping duties are imposed by a specific Regulation. Pending the adoption of a definitive decision on the imposition of an anti-dumping duty, a provisional anti-dumping duty may be imposed, which must be secured by means of guarantees, a guarantee of customs debt and VAT debt.

Regulations imposing provisional or definitive anti-dumping duties shall be published in the Official Journal of the EU. The Regulations shall specify certain exporters or countries concerned, the description of the product, the CN and the TARIC code, and a summary of all relevant facts and considerations relating to the determination of dumping and injury. The customs authorities shall levy anti-dumping duties, taking into account the nature, rate and other criteria of collection laid down in the Regulation on the imposition of these duties. The anti-dumping duty shall be levied irrespective of customs duty, other duties and duties normally imposed on imports of these goods.

Countervailing duties

Countervailing duties shall be imposed to compensate any subsidy granted, directly or indirectly, for the manufacture, manufacture, export or transport of any product whose release for free circulation in the Union causes a loss.

In the same way as the anti-dumping duties, a provisional countervailing duty, which must be secured by means of guarantees, may be imposed until a definitive decision on the imposition of a countervailing duty is taken.

Provisional or definitive countervailing duties shall apply by means of a specific Regulation published in the Official Journal of the EU.

Additional duties introduced under the common agricultural policy

Within the framework of the EU's common agricultural policy, certain processed products of agricultural origin are subject to additional duties: the agricultural component, additional sugar tax and additional flour tax.

The agricultural components are designated as EA, the additional sugar tax - with AD S/Z and the additional flour tax - with AD F/M.

The agricultural components (EA) and, where applicable, the additional sugar duty (AD S/Z) and the additional flour tax (AD F/M) shall be determined by the quantity of the following ingredients in the finished product:

1. milk fat,
2. milk proteins,
3. saharoze/invertcukurs/izoglikoze,
4. starch/glucose.

More information:here.

Rates of import duties

Import duties shall be applied in accordance with the annual amendments to Annex I (Combined Nomenclature) to Regulation (EEC) No 2658/87 on the tariff rates for a given CN code of the product. 2022 is in effectCommission Implementing Regulation (EU) 2021/1832.

Goods imported from any third country (non-EU)applicable to the product code in questionthe agreed rate of import duty (third country), or the base rate.

The preferential or reduced or totally abolished rate of import duties shall apply to imports of goods from countries with which the Union has concluded agreements providing for the application of customs tariff preferences or from countries to which the Union has unilaterally established the application of customs tariff preferences.

The preferential rate shall be applied if, in accordance with the procedures laid down, the country concerned of the imported goods is documentedpreferential origin.

For example, for a commodity describing protective gloves from leather or artificial leather, CN code 4203 29 10, the basic rate of import duty is 9%, while imports from Israel, for example, and when submitting a document corresponding to origin to the customs authority, are subject to a preferential rate of 0%.

For certain goods whose production in the Union is not sufficient to meet consumer needs during a given period or production does not take place at all, the application of autonomous Common Customs Tariff duties is partially or totally suspended in accordance with Regulation No 1387/2013, i.e. autonomous rates are temporarily introduced, which may be reviewed by the European Commission at any time.

For example, for a commodity describing yarn of silk waste (noils), not put up for retail sale, CN code 5005 00 10, the basic rate of import duty is fixed at 2.9%, while at the time the autonomous rate is set at 0% at 31.12.2023.

Basis for calculating import duties

The following shall be distinguished according to the conditions of application:

1. ad valorem duties for which the rate is determined as a percentage (%) of the customs value of the goods;
2. the specific (fixed) taxes for which the rate is determined in units of money from the quantity of the goods (e.g. kilograms, litres, tonnes, etc.);
3. combined taxes for which the rate is determined as a combination of the percentage and specific (fixed) rate.

The rates of import duties are mainly expressed in% ofcustoms values of the goods.

Where the terms “EA” (agricultural component), “AD S/Z” (additional sugar duty) or “AD F/M” (additional flour duty) are used at the rate of customs duty, it shall indicate that the goods concerned are subject to additional duties, which shall be determined in accordance with Part Three of Annex 1 “Combined Nomenclature” to Regulation No 2658/87. Annexes' to the rates set out in Annex 1 to Title I (2022)Commission Implementing Regulation (EU) 2021/1832).

In cases where, due to special circumstances, goods are exempted from import duties on entry into the territory of the Union, Council Regulation (EC) No 1186/2009 of 16 November 2009 establishing a Community system of reliefs from customs duties.

Regulatory enactments regulating the application of excise duty

The LawOn the excise tax'shall determine the procedures by which excisable goods are subject to excise duty, and this shall apply to excisable goods with which the activities specified in the Law are carried out in the Republic of Latvia.

Objects subject to excise duty

• alcoholic beverages,
• tobacco products and tobacco leaves,
• petroleum products,
• other goods:
  1. non-alcoholic beverages;
  2. coffee;
  3. natural gas;
  4. liquid, containing or not containing nicotine, and liquid used for the purpose of filling up an electronic cigarette, containing or containing nicotine, for single and reusable electronic cigarettes;
  5. preparing components for the liquid used in electronic cigarettes (e.g. propylene glycol, flavouring agents, glycerol of plant origin, nicotine extracts and other substances) used to prepare the liquid used in electronic cigarettes;
  6. substitute tobacco products, whether or not containing nicotine, other than medicinal products, tobacco products, plant smoking products, smokeless tobacco products and liquid products used in electronic cigarettes and preparations therefor (e.g. nicotine pads), whether or not containing nicotine.

The following alcoholic beverages shall be subject to excise duty:

1. beer,
2. wine,
3. fermented beverages,
4. intermediate products,
5. other alcoholic beverages.

For alcoholic beverages, the excise duty shall be calculated on the basis of the rates specified in the Law “On the excise tax'Article 12.

For beer and beer drinks containing a mixture of beer and non-alcoholic beverages or their components, the excise duty shall be calculated in accordance with the formula:

• A = L x V x s/100 where
• A – amount of excise duty (EUR);
• L – the corresponding rate of excise duty on beer for each percentage by volume of absolute alcohol
• (EUR 100 litres);
• V – the volume of beer (in litres);
• s – actual alcoholic strength (by volume).

For other alcoholic beverages, the excise duty shall be calculated in accordance with the formula:

• A = L/100 x V x s/100 where
• A – amount of excise duty (EUR);
• L - rate of excise duty (EUR per 100 litres of absolute alcohol);
• V – the volume of the alcoholic beverage (in litres);
• s – actual alcoholic strength (by volume).

Tobacco products subject to excise duty:

1. cigars and cigarillos;
2. cigarettes;
3. smoking tobacco:

• fine-cut tobacco for cigarette rolling,
• other smoking tobacco;

4. tobacco leaves,
5. heated tobacco.

Products consisting, in whole or in part, of plants, herbs, fruit or other substances, not tobacco (plant smoking products), when used using a combustion process or which can be smoked, shall be regarded as cigarettes or smoking tobacco respectively.

For tobacco products, the excise duty shall be calculated on the basis of the rates specified in the Law “On the excise tax'Article 13.

If, when releasing cigarettes for free circulation, the maximum retail selling price of cigarettes is not known, the calculation of excise duty must use the weighted average retail selling price in the previous calendar year, published in the newspaper Latvijas Vēstnesis for the period concerned. Until the calculation of the weighted average retail selling price in the preceding calendar year, the weighted average retail selling price determined above shall apply.

The excise duty on the preparing components of the liquid used in electronic cigarettes shall be calculated at the rate specified in the Law “On the excise tax'Article 13 ¹ and paragraphs 120, 121 of the Transition Rules.

On the other hand, the excise duty on replacement tobacco products is calculated at the rate specified in the Law.On the excise tax'Article 13 ² and paragraphs 122, 123 of the Transition Rules.

The following petroleum products shall be subject to excise duty:

1. petroleum products, their substitute products and components, as well as other products consisting, in whole or in part, of hydrocarbons;
2. petroleum products classified in Chapters 27 and 29 of the Combined Nomenclature, as well as in other Chapters of the Combined Nomenclature, are specified in the Annex to the Law On Excise Duty;
3. also other products (regardless of which they are included in the chapter of the Combined Nomenclature), which are not referred to in the Annex to the Law on Excise Duty, if the products referred to are marketed or intended for sale, used or intended for use in two ways or in terms of fuel, fuel or a substitute product or component thereof;

The excise duty on petroleum products shall be calculated on the basis of the rates specified in the Law “On the excise tax'Article 14.

When calculating the excise duty on petroleum products, the quantity in litres shall be determined according to the quantity of their weight at 15 °C. The quantity of petroleum products in litres shall be determined by dividing the mass in kilograms of the corresponding petroleum products indicated in the documents accompanying the consignment by the density of the petroleum products indicated on the quality certificate at 15 degrees Celsius and multiplied by 1000. The following formula shall be used for calculation:

• V ₁₅ = m/ρ ₁₅ × 1000, where
• V ₁₅ – volume of petroleum products at 15 degrees Celsius (in litres);
• m – mass of petroleum products (kg);
• ρ ₁₅ — Density of petroleum products at 15 degrees Celsius (kg/m ³).

Excise duty on other goods shall be calculated on the basis of the rates specified in the Law “On the excise tax'Articles 15, 15 ¹.

Excise duty exemptions are specified in Section 16-21 of Chapter V of the Law On Excise Duty.

Regulatory enactments governing VAT application

Added value tax law(hereinafter - VAT Act).

Cabinet Regulation No. 17 of 3 January 2013Procedures for Application of Norms of the Value Added Tax Law and Individual Requirements for Payment and Administration of Value Added Tax”.

General rules for the application of VAT in import transactions and rate

Under the VAT Act, any import of goods and VAT shall be charged by any person when the goods are released for free circulation. VAT on imports of goods shall become chargeable at the time the customs duty becomes chargeable.

The VAT rates applicable under the conditions of the VAT Act are:

1. a reference rate of 21%,
2. reduced rate of 12% - Section 42, Clauses 1-15 of the VAT Act
3. reduced rate 5% - Section 42, Paragraph 16 of the VAT Act
4. 0% rate - Articles 45, 47, 48 of the VAT Act.

The VAT exemption shall be applied in accordance with Articles 52 and 53 of the VAT Act.

Determination of the basis for calculating VAT on goods import transactions

The customs value of the imported goods shall be taxable in the VAT import transaction, to which the following costs shall be added:

1. the value of the services, if the services are directly related to the import of goods and if the value of those services (including commissions, as well as the transport, packaging and insurance costs of goods incurred up to the first destination inland) is not included in the customs value of the imported goods;
2. the transport costs of the goods to the consignee in another Member State, if the place is known at the time of import of the goods;
3. taxes, duties and other mandatory payments specified in regulatory enactments, calculated for the import of goods, excluding VAT.

If the destination is not specified specifically in the international consignment note, the address of the consignee of the goods indicated in the customs declaration shall be considered as the place of arrival of the goods when determining the value of the goods transport service to be included in the VAT taxable value.