Latvian Firms Still Getting Tax Exemptions on Payments to Russian Companies

Latvian companies continue in 2026 to obtain permits from the State Revenue Service (VID) that allow them to skip the 20% withholding tax on payments to Russian companies. As a result, firms from Russia can receive the full payment amount, even though Russia has been on the European Union's list of offshore jurisdictions since 2023. The report comes from "TV3 Ziņas".

How the rules work

Under Latvian law, payments to such jurisdictions are subject to a 20% withholding tax. The VID may nevertheless waive it if the company demonstrates that the transaction is not linked to tax avoidance.

After Russia was added to the list, the number of such permits rose significantly. One applicant was the state-owned group "Latvijas dzelzceļš" (Latvian Railway), which said it needs to manage its funds as efficiently as possible.

Calls for change

The organisation "Uzņēmēji mieram" (Entrepreneurs for Peace) has previously urged the authorities to stop issuing these permits and to raise the tax rate, but has not secured political support. Its head, Laura Skrodele, says the matter has been discussed several times with various governments and the Saeima's Budget and Finance Committee, but that political courage and willingness to find a solution were lacking.

Grain transit

Discussions are also continuing about restricting Russian grain transit. The association "Zemnieku Saeima" (Farmers' Saeima) says the proposal still faces objections from several ministries.

Prime Minister Andris Kulbergs has stressed that terminating transit contracts that have already been signed could expose Latvia to litigation and a significant risk of compensation payments. Any restrictions could therefore apply only to contracts concluded in the future.