Phone: +371 636 22586, Fax: +371 636 21297, E-mail: marketing@portofventspils.lv
Tax Incentives
Special Economic Zone
Since 1997 Ventspils Free Port is a special economic zone. Basically, the special economic zone means a designated territory of Ventspils City, about 2451.39ha large. The companies within the designated free zone area can act without any restrictions as anywhere in Latvia. If company considers so, it can acquire a license for operation under free zone status and enjoy tax advantages stipulated by the law On Tax Application in Free Ports and Special Economic Zones.
Tax incentives in SEZ
According to the law On Tax Application in Free Ports and Special Economic Zones, licensed companies are entitled to the direct and indirect tax rebates. There are remarkable tax reductions for indirect taxes like value added tax, excise tax and customs duty. Also direct taxes are considerably decreased - Real Estate tax is decreased by 80% and Corporate tax is decreased by 66% until the compensation of half (70% for small enterprises and 60% for medium enterprises) of total investment sum. That actually means that applied Corporate tax rate is 5% and the Real Estate tax is 0.3%.
Law On Tax Application in Free Ports and Special Economic Zones, as well as the provided incentives, are entirely in line with the regulations of EU and the decision making process regarding issuing of free zone license is in force at least till 2017.
Example:
| Investment amount | 10 mln. |
| Gross Profit | 1 mln. |
| Taxable Real estate value | 1 mln. |
| Payable taxes in Latvia, according to the standard rates | |
| Corporate Income Tax (15%) | 150 000 |
| Real Estate Tax (1.5%) | 15 000 |
| Total: | 165 000 |
| Payable taxes in Ventspils, in the special economic zone | |
| Corporate Income Tax (5%) | 50 000 |
| Real Estate Tax (0.3%) | 3 000 |
| Total: | 53 000 |
In this case savings per year amount to 165 000 – 53 000 = 112 000, which are subtracted each year from the half of investments (in this case 5 mln.) or 70% for small enterprises and 60% for medium enterprises, thus showing the still possible amount of rebate.
To apply these tax incentives there are no restrictions or limitations on the initial and/or total investment amount.
Acquiring SEZ status
The responsible body for issuing the licences for operation is Free Port of Ventspils Authority. Therefore an application must be submitted to Free Port of Ventspils Board. Each case is considered in Board meeting, and in case company complies with the approved criteria, a positive decision is taken.
Criteria for acquiring the SEZ status
|
No. |
Criterion |
Indicator |
Maximum points |
Minimum points |
|
1. |
Private investments planned for 3 year period |
Each 200.000 Euro give one point |
25 |
0 |
|
2. |
Projected created, maintained and lost working places in Ventspils |
Each new working place gives 1 point Each 3 maintained working places give 1 point |
40 |
0 |
|
3. |
Projected wage level in initial phase of operations |
Wage ratio against national accepted minimum wage (Euro) Example: 520:260= 2:1, correspondingly 2 points are given. |
10 |
1 |
|
4. |
Planned tax payment increase to municipal budget |
Each 2000 Lats (~ 2860 Euro) per annum give 1 point (Paid Real estate tax and 80% of Personal income tax payment) |
20 |
0 |
|
5. |
Planned introduction and use of modern technologies |
Introduced and used, rated according to 10 grade system |
10 |
0 |
|
6. |
Cargo throughput increase in port, from launch of operations |
Terminals: Each 50.000 tonnes per annum give 1 point |
30 |
0 |
|
Manufacturing companies: Involvement of Ventspils Free Port, as transport hub, in company sales and supply channels, calculated in percent out of total company transported cargo volumes |
||||
|
7. |
Planned link with local enterprises (production and services' consumption, cooperation with subcontractors) |
Cooperation with local educational and scientific establishments |
5 |
0 |
|
Cooperation with production and service providers |
5 |
0 |
||
|
8. |
Planned utilization of local resources (material and natural resources) upon implementation of investment project |
Up to 10% Up to 20% Up to 30% More |
1 2 3 5 |
0 |
Enterprise must reach at least 50 point level to obtain Ventspils Free Port licensed company status. If necessary, results are rounded off to 2 digits after comma.
Documents to be submitted to acquire the special economic zone licence
In order to sign an agreement with Free port of Ventspils Authority about operations in the special economic zone regime, a company must submit the following documents:
| 1. Application letter. |
| 2. A copy of the Registration certificate of the company. |
| 3. A copy of the articles of association or bylaws. |
| 4. A copy of annual reports from two last years (if existant). |
| 5. A short programme of action, including the programme of planned investments and time schedule. |
| 6. Filled in and signed table of criteria for acquiring the SEZ status (our employees will help you to fill it in). |