On Thursday, 19 March, Latvia’s Cabinet of Ministers supported Finance Ministry’s developed legislative draft on threats to the state and measures to prevent the damages from Covid-19 and to limit its spread. The law outlines a wide range of state support measures. This includes paying idleness benefits to employed people.

The final decision on the legislative draft will have to be made by the Saeima.

The goal of the legislative draft is establishing measures to prevent threats to the state and prevent possible negative consequences from the virus, special support mechanisms, as well as estimate crisis costs related to financing of the limitation of Covid-19 coronavirus spread.

It is expected the Cabinet of Ministers will compile industries that have suffered considerable losses because of Covid-19 and which are eligible for measures and special support mechanisms.

The legislative draft also mentions that if employers of industries struck by the crisis do not employ employees or fail to perform the acts necessary to accept the performance of the employee’s obligations, in this case employees’ wages will be paid and 75% will be compensated, but no more than EUR 700 per calendar month. This is described as idleness support, which will not be applied with PIT and compulsory state social insurance fees.

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The legislative draft mentions that taxpayers from industries affected by the crisis will have the right to apply for an extension of their respective tax repayment term, as well as request an extension if the delay with repayment was caused by Covid-19. The State Revenue Service (VID) will have the right to divide repayment schedule into separate instalments or postpone it entirely for up to three years.

The legislative draft provides that in cases when taxpayers are provided with tax repayment term extensions, VID will not include their information to the database of tax debtors.

In certain cases VID will also have the right to cancel the decision on payment term extension.

The legislation draft also provides that PIT taxpayers do not have to pay advance payments from their economic activities for 2020. This condition is applicable to payments from 1 January 2020 onward. Taxpayers will be able to perform these payments for 2020 taxation year voluntarily.

The legislative draft also provides for increasing reserve capital for state development finance institute Altum.

At the same time, to assist with Covid-19 restriction measures, it is planned to relieve alcohol used for the production of disinfectants from excise tax.

VID will also have the right will have the right in 2020, 2021, 2022 and 2032 will have the right to not make negative decisions in relation to deepened cooperation programme participants if they were affected by Covid-19 crisis.

The legislative draft also provides for state and municipal institutions, as well as public capital associations to relieve businesses affected by the crisis from rent fees or decide on reducing rent fees.

The Cabinet of Ministers will be able to adopt other support measures for industries affected by the crisis.

The legislative draft provides for prohibiting creditors from submitting legal person insolvency process requests until 1 September 2020.

The law will come to force on the next day after its promulgation and will lose power with a special law.