The maximum allowable aid intensity is changing

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The maximum allowable aid intensity is changing

March 04, 2022

Amendments to the Law "On Taxation in Free Ports and Special Economic Zones" will enter into force on March 5, which determines the amount of direct tax incentives that the companies of special economic zones and free ports will be able to receive from the accumulated amount of eligible costs in the period from 2022 to 2027.

Until 31 December 2021, the maximum allowable aid intensity for a large special economic zone (SEZ) capital company was 35% of the accumulated amount of eligible costs, for a medium-sized SEZ capital company- 45% of the accumulated eligible costs, but for a small SEZ capital company- 55% of the accumulated amount of eligible costs.

With the amendments to the Law “On Taxation in Free Ports and Special Economic Zones”, the regional base aid intensity is 30%. The aid intensities can be increased by 10% in regions where the population has decreased by more than 10% from 2009 to 2018, thus the aid intensity in Rezekne SEZ, Latgale SEZ, Liepaja SEZ and Ventspils Freeport can be further increased by 10% as for regions with declining populations.

The maximum allowable aid intensity may be increased within the framework of a specific regional development support program or an individual aid project for small and medium-sized enterprises. The aid intensity may be increased by maximum 20% for small companies and 10% for medium-sized companies.

For capital companies that have concluded investment agreements with free ports or SEZs by 31 December 2021, the amount of direct tax incentives will not change, while those companies that will enter into new investment agreements after changes in the law will be subject to the new conditions for applying direct tax incentives.

For questions about the new aid intensity, investment projects, acquisition of SEZ status, please contact the Rezekne SEZ Authority (tel. +371 6462 5941, e-mail: info@rsez.lv)