The Saeima 1 has adopted and

the President has proclaimed the following law:

Accounting Law

Chapter I
General Provisions

Section 1. Terms Used in the Law

(1) The following terms are used in the Law:

1) electronic certification – a confirmation of existence of the economic transaction
specified in the source document prepared in electronic form in the accounting information
computer system or another information system and accuracy of the information provided
therein and which has been performed in the form stipulated by the head of an undertaking and,
in accordance with the laws and regulations in the field of electronic identification of natural
persons, allows to identify the particular person – the provider of the certification. An electronic
certification may be, for example:
a) access control provisions created in a computer system according to which
access to a document is possible only after registering with a specific username and
password;
b) files attached to a document – annexes with information of specific content;
c) performing of sequential activities in the record-keeping system;
2) accounting documents – source documents, accounting registers, inventory lists,
annual statements, and accounting organisation documents in electronic or paper form;
3) chart of accounts – a classified list of accounts issued by the head of an undertaking
for long-term use which is used in the conduct of accounting in a double entry system and in
which the name of accounts and the codes assigned thereto (if such have been assigned in the
undertaking) are indicated according to the level of detail accepted in the undertaking. Accounts
are intended for recording the item value of the property of the undertaking (assets) and their
sources (liabilities) which are similar in economic nature and for accounting the changes in the
value in accounting registers (balance sheet accounts), and also for recording the value of
revenue or expenditure items and their components and for recording the changes in the value
in accounting registers (operational accounts);
4) accounting registers – an aggregate of documents (chronological and systematic
registers, including general ledger or journal-ledger and analytical accounting registers) where
the information on economic transactions included in the source documents is accumulated and
grouped (classified) according to specific features. Accounting registers may be prepared in
electronic or paper form;
5) accounting organisation documents – an aggregate of such documents issued by
the head of an undertaking which specify the procedures by which, in conformity with the
requirements of laws and regulations, accounting registers are kept in the undertaking, source
documents are prepared and their handling is organised, inventory is performed, an annual
statement and other accounting statements are prepared, and accounting documents are stored.
Such aggregate of documents shall also include a chart of accounts, the accounting policy (shall
apply to the preparation of financial statements in an undertaking other than a budget institution)
or the accounting procedures (shall apply to the preparation of financial statements in a budget
institution) and other documents issued by the head of the undertaking which are necessary for
for the conduct of accounting of the undertaking;

1
The Parliament of the Republic of Latvia

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 6) property – the resources used for the economic activity or implementation of
objectives of an undertaking, including money and properties that may be evaluated in monetary
terms – movable or immovable tangible properties (for example, plots of land, buildings,
vehicles, goods) and intangible properties (for example, concessions, licences, financial
instruments, loans, and other claims) which are indicated by the undertaking in the assets of the
component of the financial statement – balance sheet (if such is prepared);
7) economic transaction – any legal transaction (within the meaning of the Civil Law)
and also each fact or event causing changes in the liabilities or condition of property of an
undertaking. Changes in the condition of property are changes in the composition or value of
property;
8) day of economic transaction – any day when changes in the liabilities or condition
of property of an undertaking have actually occurred;
9) structured electronic invoice – an invoice which has been prepared, sent, and
received in structured electronic format allowing to process it automatically and electronically
and which conforms to the standard of an electronic invoice stipulated by the Cabinet and to be
applied in public procurements;
10) head of an undertaking:
a) in a partnership and a European Economic Interest Grouping – all members
of such partnership or Grouping or such members of the partnership or Grouping who
are authorised to represent the partnership or Grouping;
b) in a capital company, a European commercial company, a cooperative society,
and a European cooperative society – the board;
c) in an individual undertaking, farm, or fishing enterprise – the owner of the
undertaking or enterprise accordingly;
d) in a foreign merchant branch and non-resident (foreign merchant) permanent
representation – the person authorised to represent the foreign merchant (non-resident)
in the activities related to the branch or the permanent representation;
e) in an institution which is financed from the State budget or local government
budget, in a State or local government agency, another public person and institution, and
also an independent institution – the official implementing general administrative
management of the relevant institution (in an institution of direct State administration –
the head of the institution);
f) in an association, a foundation, a political organisation (party), an alliance of
political organisations (parties), a trade union, and an association of trade unions, and
also a European political party and a European Political Foundation – the executive
body or the administrative body (the board);
g) in a religious organisation and its institution – the management (the
management body);
h) an individual merchant and another natural person performing economic
activity;
i) in an association of natural persons performing economic activity – all
members of such association or such members who are authorised to represent such
association;
j) in an undertaking for which insolvency proceedings have been declared – the
administrator of insolvency proceedings (hereinafter – the administrator).
(2) The term “budget institution” used in the Law shall conform to the term used in the Law on
Budget and Financial Management.

Section 2. Purpose and Scope of Application of the Law

(1) The purpose of the Law is to promote ensuring of truthful and clear overview of the financial
position of undertakings.

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(2) The Law shall determine general and legal basis of the field of accounting, the rights,
obligations, and liabilities of the subjects of the Law, the accounting tasks, the requirements
governing the conduct of accounting, the administrative offences in the field of accounting, and
the competence in administrative offence proceedings.

Section 3. Subjects of the Law

(1) The Law shall apply to:

1) commercial companies, cooperative societies registered in the Republic of Latvia,
foreign merchant branches and non-resident (foreign merchant) permanent representations,
associations, foundations, trade unions and their associations, political organisations (parties)
and their alliances, religious organisations and their institutions;
2) European Economic Interest Groupings, European cooperative societies, European
commercial societies, European political parties, and European Political Foundations registered
in the Republic of Latvia;
3) institutions which are financed from the State budget or local government budgets,
State or local government agencies, other public persons and institutions, independent
institutions;
4) individual merchants, individual undertakings, farm and fishing enterprises, other
natural persons performing economic activity and their associations.
(2) The term “undertaking” used in this Law shall mean all subjects of the Law referred to in
Paragraph one of this Section.

Section 4. Tasks of Accounting

The tasks of accounting shall be as follows:

1) to ensure the management of an undertaking with accounting information which is
necessary for taking the decisions of economic nature;
2) to ensure the users of financial statements with truthful and complete information on
the property, liabilities, financial position, operating results, and cash flow of the undertaking;
3) to perform calculation of taxes;
4) to ensure the allocation of revenues and expenditures by accounting periods.

Section 5. Control of Accounting

(1) Control of accounting are measures taken to control the accuracy and credibility of financial
accounting, the preservation of the property of the undertaking and the accuracy of tax
calculation, and also to ascertain whether the information provided by accounting is truthful,
comparable, timely, significant, comprehensible, and complete.
(2) The accounting control system of an undertaking is an aggregate of control measures
stipulated by the head of the undertaking by implementation of which the fulfilment of the tasks
of accounting is ensured.
(3) The types of accounting control measures shall be determined by the Cabinet.

Section 6. General Requirements for the Conduct of Accounting

(1) The conduct of accounting is a cyclic process which includes several consecutive stages of
the accounting work upon carrying out of which financial statements or information for the
calculation of taxes for the relevant accounting period (month, quarter, or year) are obtained. A
complete cycle of accounting shall apply to a reporting year and it shall have the following
main stages:
1) opening of accounts;

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 2) analysis and registration of economic transactions of an undertaking in accounting
registers (hereinafter also – the recording);
3) calculation of the balances on accounts;
4) preparation of a report on the turnover of and balances on accounts;
5) recording of corrective and account-closing entries;
6) preparation of financial statements and calculation of taxes.
(2) The conduct of accounting shall be ensured in such a way that a third party competent in
the issues of accounting could obtain a truthful and clear overview of the liabilities, property,
and financial position of the undertaking on a specific date, the operational results, and the cash
flow for a specific time period, and also be able to determine the beginning of each economic
transaction and trace its course.
(3) All economic transactions of an undertaking shall be registered in accounting.
(4) The accounting information provided shall be truthful, comparable, timely, significant,
comprehensible, and complete.
(5) If the conduct of accounting is ensured electronically, using an accounting computer
programme or an accounting information computer system software, accounting documents on
the screen of a computer or another electronic device shall be presented in a human-readable
format and a possibility of creating derivatives of such documents in paper form (printouts)
shall be ensured.
(6) Human-readable format is an electronic form of data presentation which may be used by a
natural person as information without any additional processing.
(7) The Cabinet shall determine:
1) the provisions for the development of accounting organisation documents;
2) the requirements for the use of accounting computer programmes or accounting
information computer system software.

Section 7. Measure of Value in Accounting

(1) The measure of value to be used in accounting shall be euros.

(2) The foreign exchange rate to be used in accounting is the euro reference rate published by
the European Central Bank but if there is no euro reference rate published by the European
Central Bank for the particular foreign currency, the currency market rate in relation to the euro
published in a periodical of a provider of financial information recognised by the world
financial market or on its website shall be used.
(3) If the measure of value used in a source document is a foreign currency, the sums indicated
therein in terms of money for records in accounting registers shall be recalculated in euros
according to the foreign currency rate to be used in accounting which is in effect at the
beginning of the day of economic transaction.
(4) At the end of each reporting year, balances of foreign currency (for example, cash in the
cashier’s office of an undertaking, non-cash in payment accounts or sight deposit accounts),
balances of term deposits of foreign currency and balances of advances, loans, or borrowings
expressed in a foreign currency, and also other balances (claims and liabilities) of debtors or
creditors which are receivable or payable in a foreign currency, shall be re-calculated in euros
according to the foreign currency rate to be used in accounting which is in effect at the end of
the last day of the reporting year.
(5) An undertaking which prepares an annual statement in accordance with the laws governing
activities of participants of the financial and capital market and the laws and regulations issued
on the basis thereof, if there are sufficient grounds, may derogate from the provisions of
Paragraph two of this Section and, in the cases referred to in Paragraphs three and four of this
Section, use another source of currency market rate for recalculation of a sum expressed in a
foreign currency in euros, the source being specified in the accounting organisation documents
of such undertaking.

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 Chapter II
Accounting Registers and Source Documents

Section 8. General Provisions for Keeping Accounting Registers

(1) Entries supported by source documents shall be made in accounting registers.

(2) Entries in accounting registers shall be made in a timely manner, ensuring that they are
complete, accurate, and arranged in a systematic manner. Entries the content of which differs
from the source document shall not be allowed.
(3) In making entries in accounting registers, it shall be permitted to use codes, abbreviations,
individual letters or symbols (hereinafter – the codes). The codes stipulated by the head of an
undertaking (for example, the codes specified in the plan of accounts, the codes used for
recording of stocks) shall be explained in the accounting organisation documents of the
undertaking.
(4) The Cabinet shall determine:
1) the requirements for keeping accounting registers;
2) the procedures by which entries in accounting registers and source documents are
corrected or supplemented.

Section 9. Language to be Used in Accounting Registers

(1) Entries in accounting registers shall be made in the Latvian language.

(2) In making entries, also another language may be used in addition to the Latvian language in
accounting registers.

Section 10. Keeping of Accounting Registers Using Double and Single Entry Systems

(1) Accounting registers shall be kept in a double entry system insofar as it has not been laid
down otherwise in this Law.
(2) A double entry system is an accounting method according to which each economic
transaction is registered by entering the same sum in debit and credit of accounts according to
the plan of accounts used in an undertaking and the intersectionality of accounts corresponding
to the nature of the economic transaction (correspondence of accounts).
(3) By derogation from the requirement laid down in Paragraph one of this Section regarding a
double entry system, it shall be permitted to keep accounting registers in a single entry system
to:
1) individual merchants and other natural persons performing economic activity,
individual undertakings, farm and fishing enterprises if the turnover (revenues) of the persons
referred to in this Clause from the economic transactions during the previous reporting year
does not exceed EUR 300 000. The procedures by which such persons conduct the accounting
in a single entry system shall be determined by the Cabinet;
2) associations, foundations, trade unions and their associations the turnover (revenues)
of which from the economic transactions in two previous consecutive reporting years does not
exceed EUR 100 000 in the reporting year. The procedures by which such persons conduct the
accounting in a single entry system shall be determined by the Cabinet;
3) religious organisations and their institutions the turnover (revenues) of which from
the economic transactions in two previous consecutive reporting years does not exceed
EUR 100 000 in the reporting year. The procedures by which such persons conduct the
accounting in a single entry system shall be determined by the Cabinet.
(4) A single entry system is an accounting method according to which, without using accounts,
cash and non-cash revenues, expenditures, and balances, and also changes in the condition of

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property are registered insofar as it is necessary for the calculation of taxes or for the control of
property and settlements.

Section 11. Source Documents, Their Division and Details and Information to be Included
in a Source Document

(1) A source document is a document attesting the existence of an economic transaction of an

undertaking and including at least the details referred to in Paragraph five of this Section and
information on the economic transaction. The source document may be prepared in electronic
or paper form. The source document shall be prepared in a way that, throughout its storage
period, the information included therein would not be lost and also it would be possible to create
a derivative of such document.
(2) Source documents shall be divided into external source documents and internal source
documents.
(3) A source document received in an undertaking the author of which is another participant to
the economic transaction and also such document the author of which is the own undertaking
shall be considered an external source document if the source document is intended for the
issuing (sending) to another participant to the economic transaction. All other source documents
shall be considered to be internal source documents of the undertaking.
(4) If there is an external source document for any economic transaction, it shall be given
priority in comparison with any internal source document.
(5) At least the following details and information on the economic transaction shall be included
in a source document:
1) the title of the document type;
2) the date of the document;
3) the number of the document;
4) information on the undertaking which is a participant to the economic transaction
which issued the document in its name (hereinafter – the author of the document):
a) the name of the author of the document (for a commercial company, individual
merchant – the firm name), registration number, or registration code of a taxpayer;
b) if the author of the document is such natural person who performs economic
activity but is not an individual merchant – the given name and surname, the taxpayer
registration code;
5) information which allows unequivocal identification of other participants to the
economic transaction if any (indicate the same information which is specified in Clause 4 of
this Paragraph in relation to the author of the document);
6) if another participant to the economic transaction is a natural person who does not
perform economic activity – the given name and surname. The personal identification number
(if such has been granted to a person) shall be indicated upon request of such person or if it
arises from other laws and regulations;
7) a description of the economic transaction and the value in monetary terms but in the
cases specified in laws and regulations – also other information on the economic transaction
(for example, quantity, unit of measurement);
8) for individual types of source documents – also other mandatory details specified in
laws and regulations;
9) the signature of the person responsible for the accuracy of information provided in
the source document (except for the cases referred to in Paragraphs six, seven, and eight of this
Section).
(6) An undertaking is entitled to replace the detail “signature” with an electronic certification
in an internal source document if it has been prepared in electronic form.

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(7) Also such document may be considered an external source document which does not contain
the detail “signature” but contains other details specified for the source document in Paragraph
five of this Section and information on the economic transaction if:
1) the undertaking issues the document to another participant to the economic
transaction (another undertaking or natural person who does not perform economic activity) –
the recipient of goods or service – for payment (invoice) and the existence of the economic
transaction specified in this document is justified by another external document which has legal
force within the meaning of the Law on Legal Force of Documents;
2) the undertaking issues the document to a natural person who does not perform
economic activity) – the recipient of goods or service – for payment (invoice) and the existence
of the economic transaction referred to in this document is justified by an agreement of the
undertaking with the abovementioned natural person.
(8) Also such document referred to in this Paragraph may be considered an external source
document which does not contain the detail “signature” but contains other details specified for
the source document in Paragraph five of this Section and information on the economic
transaction if the existence of the economic transaction referred to in the relevant document
according to the procedures stipulated by the head of an undertaking is certified by the
responsible person of the recipient of the document (undertaking) regarding performance of the
economic transaction and the accuracy of the information provided in the source document:
1) the document which is issued by another undertaking to the undertaking – the
recipient of goods or service – for payment (invoice);
2) the document which is issued by another undertaking to the undertaking – the
recipient of goods or service – for acceptance of the goods or service;
3) the document which is issued upon request of the undertaking – the payment service
user – by the payment service provider (within the meaning of the Law on Payment Services
and Electronic Money) for the fact that the payment order of the undertaking – the payment
service user – has been executed;
4) a non-certified bank statement of the undertaking – the payment service user – which
upon request of the payment service user is issued by the payment service provider (within the
meaning of the Law on Payment Services and Electronic Money);
5) a receipt if it has been prepared in accordance with the laws and regulations governing
the procedures for the use of electronic devices and equipment for the registration of taxes and
other payments.
(9) The undertaking – the preparer of the document – is entitled to certify the external source
documents referred to in Paragraph eight, Clauses 1, 3, and 4 of this Section, if it is necessary
to certify them, with a qualified electronic stamp issued to the undertaking (within the meaning
of Article 3(27) of Regulation (EU) No 910/2014 of the European Parliament and of the
Council of 23 July 2014 on electronic identification and trust services for electronic
transactions in the internal market and repealing Directive 1999/93/EC).
(10) Also a derivative in electronic form of a source document received with the intermediation
of electronic data transmission channels and prepared in paper form and a derivative in paper
form (printout) of such derivative or source document prepared in electronic form may be
considered an external source document, if the existence of the economic transaction referred
to in the relevant derivative of the source document is certified, according to the procedures
stipulated by the head of an undertaking, by the responsible person of the performance of the
economic transaction and the accuracy of the information provided in the source document. The
responsible person of the recipient (undertaking) of the derivative of the document is entitled
to request, according to the procedures stipulated by the head of the undertaking, that the issuer
of the derivative of the source document presents the original of the document if it is necessary
to ascertain the accuracy of the derivative of the document or the legal force of the original of
the document.

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(11) The requirements laid down in Paragraph five of this Section in relation to the details of
the source document and information on economic transactions shall be applied insofar as
special requirements for the development and drawing up of individual types of source
documents (for example, a value added tax invoice, a structured electronic invoice) are not laid
down in other laws and regulations.
(12) In order to record the calculated tax, also tax returns specified in laws and regulations may
be regarded as an external source document. In order to account the taxes, fees, and other
payments attributable to the State budget which are administered by the tax administration and
State fee administration (within the meaning of the law On Taxes and Fees), the documents
issued by the abovementioned administration (for example, decisions taken in the course of
administrative proceedings) may be regarded as an external source document even if such
documents do not contain any of the details specified in Paragraph five of this Law or
information to be indicated on an economic transaction. The tax administration and the State
fee administration, when accounting the taxes, fees, and other payments administered by them,
may record information in accounting registers also on the basis of the calculations of the State
information system on a specific date made in accordance with laws and regulations.
(13) The procedures for the drawing up of source documents and the requirements for the source
documents which are prepared in relation to goods, other material values and services, and also
in relation to the use of cash or non-cash advance or the reimbursement of expenditures of
employees shall be determined by the Cabinet.

Section 12. Documents of the Supply of Goods

(1) A document of the supply of goods is a document which certifies the fact of the supply and
receipt of goods and may be used to determine the origin and belonging of goods at the sites
where goods are received and issued.
(2) It shall not be mandatory to include the information on the unit price of goods and the value
of the economic transaction in monetary terms in the document of the supply of goods. If the
document of the supply of goods does not include the abovementioned information for it to be
possible to enter (record) an economic transaction in accounting registers, a source document
prepared by the consignor (issuer) of goods shall be required in addition which includes
information on the unit price of goods and the value of the economic transaction in monetary
terms.
(3) In addition also the number and date of the relevant document of the supply of goods or, if
the supply of goods has been performed among units of an undertaking or persons who are
responsible for the conservation of specific goods – other information which allows for
unequivocal identification of the supply of specific goods, shall be indicated in the source
document referred to in Paragraph two of this Section.
(4) The Cabinet shall determine the details and information to be included in the documents of
the supply of goods, the procedures for the drawing up, signing, and registration of such
documents.

Section 13. Time Period for Recording Source Documents

(1) External and internal source documents on the economic transactions of the undertaking
shall be recorded as soon as possible but not later than within 20 days after the end of the month
in which the source document was received or issued (sent) and not later than by the date of
signing such financial statement which is prepared for such reporting period.
(2) The time period specified in Paragraph one of this Section for the recording of external and
internal source documents shall not apply to undertakings which, in accordance with the Micro-
enterprise Tax Law have obtained the status of a micro-enterprise taxpayer, to individual
merchants and other natural persons performing economic activity, individual undertakings and

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farm and fishing enterprises, if the turnover (revenues) of the persons referred to in this
Paragraph from economic transactions in the previous reporting year does not exceed
EUR 300 000. Such undertakings, insofar as it is not in contradiction with the requirements of
the laws and regulations governing the field of taxes that are binding upon them, may record
external and internal source documents on the economic transactions of the undertaking in the
accounting registers of the undertaking not later than within 15 days after the end of the quarter
in which the relevant source document was received or issued (sent), and not later than by the
date of signing its financial statement prepared for the current reporting period but when a
financial statement is not prepared – accordingly by the date of submission of the micro-
enterprise tax declaration or personal income tax declaration which is prepared for such
reporting period.
(3) The time period for recording external and internal source documents specified in Paragraph
one of this Section shall not apply to the associations, foundations, trade unions and their
associations referred to in Section 10, Paragraph three, Clause 2 of this Law and also to the
religious organisations and their institutions referred to in Section 10, Paragraph three, Clause 3
of this Law. The abovementioned persons, insofar as it is not in contradiction with the
requirements of the laws and regulations governing the field of taxes that are binding upon
them, may record external and internal source documents not later than within 15 days after the
end of the quarter in which the relevant source document was received or issued (sent), and not
later than until the date of signing such components of the annual statement or financial
statement which is prepared for the relevant reporting period.

Section 14. Special Provisions for the Accounting of Cash

(1) The cash contribution received in the cashier’s office of an undertaking (hereinafter – the
cash revenues) and the cash disbursements from the cashier’s office of an undertaking
(hereinafter – the cash expenditures) shall be registered in the cash book. The cash book shall
be arranged for each day on which there had been cash revenues or expenditures, indicating the
cash balance at the beginning of the day, the sums total of the cash revenues and the cash
expenditures, and the cash balance at the end of the day.
(2) If the average cash revenues of a working day of the previous calendar month of an
undertaking do not exceed EUR 500, the undertaking may arrange the cash book once a week –
on the last working day of the week. The average cash revenues of a working day shall be
calculated by adding up the cash revenues received on the working days of the previous
calendar month on which there had been cash revenues and dividing the sum total acquired by
the number of working days of the abovementioned calendar month. Any calendar day on which
the undertaking performs its activity shall be considered a working day.
(3) A cash book need not be arranged by:
1) individual undertakings, farm and fishing enterprises, individual merchants, and other
natural persons performing economic activity and conducting the accounting in a single entry
system if the abovementioned persons are registering the cash revenues and the cash
expenditures in the recording journal of revenues and expenditures of economic activity or in
the recording register of revenues;
2) undertakings which are registering the cash revenues, using electronic devices and
equipment for the registration of taxes and other payments, and, according to the procedures
stipulated by the head of an undertaking, pay the cash received during a working day into an
account of the undertaking opened with a payment service provider (within the meaning of the
Law on Payment Services and Electronic Money);
3) associations, foundations, trade unions and their associations, and also religious
organisations and their institutions if the abovementioned persons conduct the accounting in a
single entry system and register the cash revenues and the cash expenditures in the cash flow
recording journal.

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(4) The requirements for the source documents of the cash revenues and the cash expenditures
and for arranging a cash book shall be determined by the Cabinet.

Chapter III
Inventory

Section 15. Purpose of Inventory

(1) The purpose of inventory is the examination of the actual state of the property of an
undertaking and the liabilities of an undertaking on a specific date and the coordination of the
accounting data with the results of inventory.
(2) Inventory shall be performed, applying the procedures laid down in laws and regulations
and the accounting organisation documents.
(3) The methods of inventory, the procedures for the performance of inventory, the procedures
for the documentation of results and recording of differences detected during inventory shall be
determined by the Cabinet.

Section 16. Provisions for Inventory

(1) Inventory shall be performed in the following cases:

1) in commencing the activity of an undertaking;
2) in concluding each reporting year (hereinafter – the closing inventory of the reporting
year);
3) in terminating the activity of an undertaking;
4) in reorganising an undertaking, insofar as it has not been laid down otherwise by
laws;
5) in declaring insolvency proceedings;
6) if, on the basis of the decision of the merchant, the activity of an undertaking is
suspended or renewed;
7) in other cases if it arises from other laws and regulations or the accounting
organisation documents of the relevant undertaking.
(2) The results of the inventory shall be reflected in lists of inventory.
(3) An individual enterprise, a farm and fishing enterprise, and also an individual merchant and
another natural person performing economic activity shall apply the provisions of this Chapter
to the property provided for or used for the performance of economic activity.

Section 17. Additional Provision Regarding the Closing Inventory of the Reporting Year

The closing inventory of the reporting year may be performed within three months
before the final day of the reporting year or within a month after it, recalculating the balances
established on the day of the inventory in accordance with the accounting data on the last day
of the reporting year. The results of inventory shall be recorded in accounting registers until the
date of signing the annual statement.

Chapter IV
Annual Statement and Other Statements

Section 18. Annual Statement

(1) An annual statement the structure, volume, and content, and also the procedures for drafting,
examining, and submitting of which are laid down by the Law on the Annual Financial
Statements and Consolidated Financial Statements, the laws governing the activity of the

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financial and capital market participants and the laws and regulations issued on the basis
thereof, the laws governing the activity of the independent or autonomous State institution, or
the laws and regulations adopted in accordance with the Law on Budget and Financial
Management shall be prepared for each reporting year. The suspension of activity of a
commercial company on the basis of a decision of the merchant shall not exempt the
commercial company from preparing the annual statement.
(2) The provisions of Paragraph one of this Section shall not apply to:
1) associations, foundations, trade unions and their associations, political organisations
(parties) and alliances thereof, and also religious organisations and their institutions. The
Cabinet shall determine the structure, volume, content, and the procedures for drafting,
examining, and submitting the annual statement for such persons;
2) undertakings with regard to which insolvency proceedings have been declared in
accordance with the Insolvency Law but in relation to which no decision has been taken yet by
the administrator on continuing the economic activity of the debtor in the full or limited extent.
Such undertakings, while the insolvency proceedings of the undertaking continue, shall prepare
the financial statement referred to in Section 22, Paragraph three of this Law for each reporting
year.
(3) The provisions of Paragraph one of this Section in relation to foreign merchant branches
and non-resident (foreign merchant) permanent representations shall be applicable insofar as it
arises from the requirements for the preparation of financial statements laid down in the laws
governing the relevant type of economic activity and taxes.

Section 19. Report on Economic Activity

(1) A report on economic activity is a report for the time period that is shorter than a year and
a commercial company or cooperative company shall prepare it for the purpose of decision-
making in the cases provided for in the Commercial Law or the Cooperative Societies Law
accordingly. The report on economic activity shall be prepared in accordance with the
provisions for the preparation of an annual statement provided for the relevant undertaking in
laws and regulations and applying the procedures for the preparation of an interim period
statement.
(2) Prior to taking of the decision to suspend the activity of a commercial company on the basis
of the decision of a merchant, a report on economic activity shall be prepared in the cases
specified in the Commercial Law. The report on economic activity referred to in this Paragraph
shall be prepared, examined, and submitted in accordance with the provisions for the
preparation, examination, and submission of an annual statement provided for the relevant
undertaking in laws and regulations. In addition, the report on economic activity referred to in
this Paragraph shall provide detailed information on the losses caused by reduction in the value
of the property due to the suspension of the activity of the commercial company, indicating the
basis for calculating the amount of losses and the impact of such losses on the evaluation of the
component items of the financial statement.

Section 20. Closing Financial Statement in Case of Reorganisation of an Undertaking

(1) Unless it has been laid down otherwise in laws and regulations, in order to exclude from the
relevant register an undertaking reorganised (acquired or divided) through merging or
divestiture, a closing financial statement of the undertaking to be acquired or divided through
divestiture shall be prepared accordingly. It shall be prepared, examined, and submitted in
accordance with the provisions for the preparation, examination, and submission of an annual
statement provided for the relevant undertaking in laws and regulations.
(2) In addition, the closing financial statement referred to in Paragraph one of this Section shall
provide detailed information on the losses caused by reduction in the value of the property due

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to the reorganisation of the undertaking, indicating the basis for calculating the amount of losses
and the impact of such losses on the evaluation of the component items of the financial
statement.
(3) The requirement of Paragraph two of this Section regarding the provision of detailed
information on the losses shall not apply to the closing financial statement which is prepared in
case of reorganisation of a budget institution or a State or local government agency.

Section 21. Closing Financial Statement in Case of Terminating the Activity of an

Undertaking

(1) In terminating the activity of an undertaking (also in case of insolvency proceedings when
the activity of the undertaking is terminated), such closing financial statement of the activity of
the undertaking shall be prepared which consists only of the balance sheet and the profit or loss
account or another report on the results of economic activity (for example, a revenue and
expenditure account) which is provided for in the laws and regulations governing the
preparation of an annual statement of the relevant undertaking or in the laws governing the
activity of participants to the financial and capital market and the laws and regulations issued
on the basis thereof.
(2) Unless it has been laid down otherwise in laws and regulations, the closing financial
statement of the activity of the undertaking referred to in Paragraph one of this Section shall be
prepared, applying the procedures by which such undertaking prepares a financial statement
which does not conform to the principle for the continuation of the activity.
(3) The procedures by which the property and liabilities of an undertaking are evaluated in
accounting and indicated in financial statements, if the activity of an undertaking or its unit is
terminated, shall be determined by the Cabinet.

Section 22. Balance Sheet of a Debtor and Financial Statement in Case of Insolvency of a
Legal Person

(1) The balance sheet of a debtor shall be prepared for an undertaking for which insolvency
proceedings of a legal person have been initiated in accordance with the Insolvency Law. In
preparing the balance sheet of a debtor in case of initiating insolvency proceedings of a credit
institution, the norms of the Credit Institution Law shall be applied.
(2) The administrator shall prepare the balance sheet of a debtor which, in accordance with the
Insolvency Law, must be prepared immediately after declaration of insolvency proceedings of
a legal person, applying all the same requirements which apply to the balance sheet for the
annual accounts of such undertaking.
(3) The undertaking referred to in Paragraph one of this Section in relation to which the
administrator has not taken the decision on continuing the economic activity of a debtor in the
full or limited extent for the reporting year in which insolvency proceedings of a legal person
were declared and also for each subsequent reporting year in which such insolvency
proceedings continue shall prepare a financial statement which consists only of the balance
sheet and the profit or loss account or another report on the results of the economic activity (for
example, the revenue and expenditure account). Such financial statement shall be submitted to
the State Revenue Service.
(4) The financial statement referred to in Paragraph three of this Section shall be prepared,
applying the procedures by which a financial statement is prepared by an undertaking that does
not conform to the principle for the continuation of the activity and in compliance with the laws
and regulations issued on the basis of Section 21, Paragraph three of this Law regarding the
evaluation of the property and liabilities of an undertaking in accounting and indication in
financial statements if the activity of the undertaking or its unit is terminated.

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Section 23. Special Provisions for Performers of Economic Activity who are Payers of
Personal Income Tax for Income from Economic Activity or who have
Chosen to Pay the Micro-enterprise Tax

(1) The provisions of Sections 18, 19, 20, 21, and 22 of this Law shall not apply to individual
merchants, farm and fishing enterprises, individual merchants, and other natural persons who
perform economic activity and are payers of personal income tax for the income from the
economic activity or have chosen to pay the micro-enterprise tax. Such undertakings shall
register revenues, expenditures, and economic transactions in a simple or double entry system
insofar as it is necessary for the calculation of taxes in order to be able to prepare tax returns,
informative declarations, or other necessary documents in accordance with the requirements
laid down by the particular tax law or in the laws and regulations adopted according to it.
(2) The undertakings referred to in Paragraph one of this Section which conduct the accounting
in a simple entry system shall apply the procedures provided for in the Cabinet regulations
referred to in Section 10, Paragraph three, Clause 1 of this Law.
(3) The undertakings referred to in Paragraph one of this Section which conduct the accounting
in a double entry system and are payers of personal income tax for the income from the
economic activity shall also prepare the balance sheet and the revenue and expenditure account
the content and the procedures for the preparation and submission of which shall be determined
by the Cabinet.

Section 24. Beginning, End, and Duration of the Reporting Year

(1) The reporting year shall cover 12 months and it shall usually coincide with the calendar
year. A different beginning and end for the reporting year may be only if such is determined by
the articles of association, by-law, or constitution of the relevant undertaking or by a partnership
agreement.
(2) The reporting year may be changed. A change of the reporting year shall be justified and
relevant explanations therefor shall be provided in the appendix to the annual statement.
(3) The first reporting year of a newly established undertaking may cover a shorter or a longer
time period, but not longer than 18 months.
(4) If the beginning of the reporting year of an existing undertaking is changed, the reporting
year shall not exceed 12 months.
(5) The reporting year in which the undertaking is reorganised or terminates its activities and
also the reporting year in which its beginning has been changed may be shorter than 12 months.

Section 25. Special Provisions for the Reporting Year or Economic Year for Individual
Types of Undertakings

The provisions of Section 24 of this Law shall not apply to an undertaking the duration,
beginning, and end of the reporting year or economic year of which is determined by relevant
laws.

Section 26. Special Provisions for the Reporting Year of an Association, a Foundation, a
Trade Union and an Association of Trade Unions, a Religious Organisation
and Its Institution, and also a Political Organisation (Party) and an Alliance
of Political Organisations (Parties)

The provisions of Section 24 of this Law shall not apply to an association, a foundation,
a trade union and an association of trade unions, a religious organisation and its institution, and
also a political organisation (party) and an alliance of political organisations. The reporting year
of each such person shall cover 12 months and coincide with the calendar year. The reporting

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year in which the undertaking commences activity, terminates activity, or is reorganised may
be less than 12 months in duration but it shall end not later than on 31 December of the calendar
year.

Chapter V
Storage of Accounting Documents

Section 27. General Provisions for the Storage of Accounting Documents

(1) Accounting documents in paper form shall be stored in the territory of the Republic of
Latvia. Accounting documents in electronic form shall be stored in the territory of the Republic
of Latvia or another European Union Member State in accordance with the requirements laid
down in Regulation (EU) 2018/1807 of the European Parliament and of the Council of
14 November 2018 on a framework for the free flow of non-personal data in the European
Union.
(2) An undertaking shall systematically arrange and store accounting documents in the archives
of the undertaking according to the procedures stipulated by the head of the undertaking.
(3) Accounting documents shall, until transfer thereof for storage in the archives of an
undertaking, be systematised (grouped, collected) and stored according to the procedures
stipulated by the head of the undertaking at one or several storage points.
(4) Natural and legal persons may use accounting documents of an undertaking only with the
permission of the head of the undertaking. Such documents may be removed from the
undertaking only in the cases and in accordance with the procedures laid down by law.
(5) If an undertaking is being reorganised or its activity is terminated, the liquidation
commission (liquidator) or the head of the undertaking shall determine the procedures for the
subsequent storage of the documents of the undertaking after coordination with the National
Archives of Latvia.

Section 28. Storage Period of Accounting Documents

The minimum storage period of accounting documents shall be as follows:

1) for annual statements – until the undertaking is reorganised or its activity is
terminated, insofar as it is not laid down otherwise in other laws and regulations;
2) for inventory lists, accounting registers, and accounting organisation documents –
10 years;
3) for source documents regarding the remuneration calculated for employees, payment
for the period of the leave granted, or reimbursement of the annual paid leave not used,
compensation for forced absence from work, etc. with division according to years and months
dating not earlier than 1 January 1999 – 75 years;
4) for the source documents referred to in Clause 3 of this Section dating 1 January 1999
or later if they include information on the following calculated for employees:
a) remuneration, compensation for forced absence from work, etc. with division
according to years and months – 10 years;
b) payment for the period of the leave granted and reimbursement of the annual
paid leave not used with division according to years and months – 10 years from the day
when employment relationship with the particular undertaking as an employee has been
terminated;
5) for other source documents – until the date they are necessary to ensure compliance
with the requirements for the traceability of an economic transaction specified in Section 6,
Paragraph two of this Law, but not less than five years.

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Section 29. Conversion of an Accounting Document in Paper Form into Electronic Form
for Storage in the Electronic Environment

(1) An undertaking has the right to convert an accounting document in paper form (hereinafter –
the original document) into electronic form for storage in the electronic environment.
(2) The document converted into electronic form for storage in the electronic environment shall
have the same legal force as the original document and the undertaking has the right to destroy
the original document only if the undertaking complies with the following provisions for the
storage of a document converted into electronic form for storage in the electronic environment:
1) the portrayal and conformity of the content of the original document are ensured
throughout the data storage period specified in Section 28 of this Law;
2) the content is provided in human-readable format on the screen of a computer or
another electronic device and, where necessary, creation of its derivatives in paper format is
ensured;
3) the converted document is protected against unauthorised alterations or destruction;
4) the conversion process and also the process for the destruction of the original
document are documented in accordance with the procedures stipulated by the head of an
undertaking.

Chapter VI
Division of Competence in the Field of Accounting

Section 30. Competence of the Ministry of Finance in the Field of Accounting

(1) The Ministry of Finance shall develop the State policy in the field of accounting and
coordinate the implementation thereof.
(2) The Ministry of Finance shall:
1) develop draft laws and regulations in the field of accounting;
2) implement international cooperation in the field of accounting and ensure
representation of Latvia in the meetings organised by the European Union authorities and other
international organisations in accounting issues, also to participate in the assessment of draft
legal acts developed by the European Union authorities governing the field of accounting;
3) assess the draft laws and regulations prepared by other ministries in relation to
accounting issues and, if necessary, provide recommendations for the improvement thereof.

Section 31. Obligations of the Head of an Undertaking in the Field of Accounting

(1) The head of an undertaking has the obligation to organise the conduct of accounting, the
performance of inventory, the storage of accounting documents, and the preparation of the
relevant reports in the undertaking in accordance with the requirements of this Law and the
laws and regulations issued according to it.
(2) The head of an undertaking has an obligation to ensure:
1) the development, issuing of accounting organisation documents and the conformity
with the procedures specified therein in the undertaking;
2) the development, introduction, maintenance, and improvement of an accounting
control system in the undertaking;
3) the determination of the general security provisions for the accounting information
computer systems and the mandatory technical and organisational requirements for accounting
data protection in the undertaking if the conduct of accounting is ensured, using an accounting
computer programme or accounting information computer system software, insofar as it has
not been laid down otherwise in other laws and regulations, and also to ensure control of the
conformity with the abovementioned provisions and requirements in the undertaking;

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 4) the conservation of all originals of accounting documents or documents converted
into electronic form for storage in the electronic environment and their availability to
performers of audits, tax administration, law enforcement authorities, courts, and also other
authorities in the cases provided for in laws and regulations in accordance with that referred to
in the Trade Secret Protection Law in relation to a trade secret in accounting.
(3) The requirement laid down in Paragraph two, Clause 1 of this Section shall not apply to the
head of the undertaking referred to in Section 10, Paragraph three of this Law if the relevant
undertaking conducts the accounting in a simple entry system. The abovementioned
undertakings shall be released from the development and issuing of accounting organisation
documents.
(4) The requirements laid down in Paragraph two, Clauses 2 and 3 of this Section shall not
apply to the head of the undertaking referred to in Section 35 of this Law who is entitled to
conduct the accounting himself or herself. The abovementioned undertakings shall be released
from the development, introduction, and maintenance of an accounting control system, and also
from the determination of the general security provisions for the accounting information
computer systems and the mandatory technical and organisational requirements for accounting
data protection.

Section 32. Rights of the Head of an Undertaking in the Field of Accounting

The head of an undertaking is entitled:

1) in conformity with the provisions of Section 11 of this Law regarding details of the
document to be included in the source document and information on the economic transaction,
to select the form (electronic or paper form), content of a source document and the procedures
for the drawing up or preparation thereof, except for the case when the form, content of the
relevant source document and the procedures for the drawing up or preparation thereof are
governed by a particular law or regulation;
2) to select the type, content, number of accounting registers and the procedures for the
preparation thereof (electronic or paper form), taking into account the structure of the particular
undertaking, the nature of the economic activity, and the amount of the information to be
processed, except for the case when the type, content of the relevant accounting register and the
procedures for the preparation thereof are governed by a particular law or regulation;
3) to select an accounting computer programme or accounting information computer
system software, taking into account the functional, technical, and data security requirements
preferable or necessary for the activity of the particular undertaking, except for the case when
the use of the particular computer programme or the requirements to be brought forward for it
are governed by a particular law or regulation.

Section 33. Responsibility and Obligation of the Head of an Undertaking to Reimburse

Losses

(1) The head of an undertaking shall be responsible for:

1) conduct of accounting in accordance with the requirements of this Law;
2) the conservation and protection of the originals, copies, or data images of accounting
documents against destruction or losing until their transfer to the archives of the undertaking,
and also the conservation of accounting documents in the archives of the undertaking and their
availability to performers of audits, tax administration, law enforcement authorities, courts, and
also other authorities in the cases provided for in laws and regulations in accordance with that
specified in the Trade Secret Protection Law in relation to a trade secret in accounting.
(2) The head of an undertaking shall be liable for the losses that have been incurred by the
undertaking, the State (local government), or third party as a result of violation of the provisions
of this Law due to his or her fault. Natural and legal persons who have incurred such losses are

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entitled to claim compensation therefor in accordance with the procedures laid down in laws
and regulations.

Chapter VII
Person Entitled to Conduct the Accounting

Section 34. Accountant and Outsourced Accountant

(1) The conduct of accounting in an undertaking shall be performed by an accountant or

outsourced accountant with whom the head of the undertaking has entered into a relevant
written agreement which stipulates the obligations, rights, and liability of such person.
(2) Within the meaning of this Law:
1) an accountant is a natural person who, on the basis of a written agreement with the
undertaking (except for a work-performance contract), prepares annual statements,
consolidated annual statements, and other financial statements specified in laws and regulations
in the undertaking in accordance with the requirements of the relevant laws and regulations and
also is competent to perform other obligations of the conduct of accounting specified in this
Law and whose competence in the abovementioned accounting issues is certified by a relevant
education document (diploma or certificate), and also such natural person whose competence
in the accounting issues referred to in this Clause is certified by experience or a corresponding
certificate certifying knowledge in the field of accounting;
2) an outsourced accountant is a person who, on the basis of a written contract with the
undertaking (except for a work-performance contract), pledges to provide or provides
accounting services to the customer and conforms to the following conditions:
a) if the outsourced accountant is a natural person, he or she has obtained at least
first level vocational higher education (college education) within the meaning of the
Vocational Education Law or academic higher education (at least bachelor’s degree) in
the field of accounting, economy, management, or finances and he or she has at least
three-year experience in the field of accounting;
b) if the outsourced accountant is a merchant, the requirements for education and
experience referred to in Sub-clause “a” of this Clause shall apply to a member of the
board of the commercial company or an individual merchant, or a participant in the
merchant who is responsible for the provision of the outsourced accounting service
(hereinafter – the responsible outsourced accountant);
3) such natural person shall not be considered an accountant who only performs the
obligation of a recording and accounting employee under management of an accountant or
independently in accordance with the basic tasks conforming to the profession and the basic
requirements for qualification (for example, calculation of wages or prime cost, recording of
material values, preparation of invoices, preparation of inventory lists, entering of the data of
source documents, arrangement of the archives, conduct of single entry accounting) specified
in the laws and regulations regarding classification of professions or other obligations related
to the conduct of accounting (for example, scanning of invoices, conversion into human-
readable and machine-readable format (in XML format) or sending, arranging of documents for
storage);
4) such natural or legal person shall not be considered an outsourced accountant who
only performs the obligations referred to in Clause 3 of this Paragraph.
(3) An outsourced accountant shall ensure conformity with the requirements of the Law on the
Prevention of Money Laundering and Terrorism and Proliferation Financing.
(4) conduct of accounting of trade unions and their associations, associations and foundations
may be performed by a voluntary performer of work with whom the management body has
entered into a written agreement in which the obligations, rights, and liability of such person
are specified.

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Section 35. Head of an Undertaking Entitled to Conduct the Accounting Himself or
Herself

By derogation from the requirements of Section 34 of this Law, the head of an

undertaking is entitled to conduct the accounting himself or herself if he or she is:
1) an owner of an individual enterprise, farm or fishing enterprise;
2) a natural person performing economic activity;
3) an individual merchant;
4) the sole member of the board of a capital company who is the sole participant in the
capital company;
5) the head of a religious organisation or its institution if accounting in the religious
organisation or its institution is conducted in a single entry system;
6) a member of the executive body or management body (the board) of an association,
foundation;
7) an administrator who, in fulfilling the requirements of the Insolvency Law, organises
recording of accounting of a debtor during insolvency proceedings of a legal person.

Section 36. Person who is not Considered an Outsourced Accountant

If an institution which is financed from the State budget or local government budgets,
and a State or local government agency provides accounting services to another institution
financed from the State budget or local government budgets, and State or local government
agency, it shall not be considered an outsourced accountant.

Section 37. Person who is Prohibited to be an Outsourced Accountant

Such natural person who has been punished for committing an intentional criminal
offence in national economy or in the service of State authorities or for committing such crime
which is related to terrorism and who has not been exonerated or whose criminal record has not
been extinguished or set aside, or such natural person for whom the licence of an outsourced
accountant has been cancelled for the violations of the Law on the Prevention of Money
Laundering and Terrorism and Proliferation Financing or the Law on International Sanctions
and National Sanctions of the Republic of Latvia is prohibited from being an outsourced
accountant. Such natural person may not hold leading offices or be the beneficial owner (within
the meaning of the Law on the Prevention of Money Laundering and Terrorism and
Proliferation Financing) for an outsourced accountant.

Section 38. Licensing of an Outsourced Accountant

(1) The activity of an outsourced accountant shall be permitted if he or she has a valid licence
of an outsourced accountant.
(2) The issuing of a licence of an outsourced accountant, the extending (hereinafter – re-
registration), suspension, cancellation of its term of validity, and the supervision of outsourced
accountants shall be performed by the State Revenue Service. The licence of an outsourced
accountant shall be issued for a period of five years.
(3) A State fee in the amount of EUR 100 shall be paid for the issuing or re-registration of the
licence of an outsourced accountant. The State fee shall be paid before submitting the relevant
documents by transferring it into the State budget. If after receipt of all the necessary documents
the State Revenue Service detects a non-conformity with the licensing requirements and it is
not eliminated, the State fee shall not be repaid. Payments into the State budget shall be made,

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using the intermediation of such payment service provider which has the right to provide
payment services within the meaning of the Law on Payment Services and Electronic Money.
(4) A person who wishes to commence the provision of outsourced accounting services or to
re-register a licence shall submit a relevant submission to the State Revenue Service, indicating
or attaching the following information and documents:
1) a submission indicating the following information:
a) a merchant – the given name, surname, personal identity number of the
responsible outsourced accountant, the name (firm name) and registration number or
taxpayer registration code of the merchant;
b) a natural person performing economic activity – the given name, surname,
taxpayer registration code;
2) the following documents shall be attached to the submission:
a) a copy of the civil liability insurance policy;
b) documentation of policies and procedures for the internal control system
established in accordance with the laws and regulations in the field of the prevention of
money laundering and terrorism and proliferation financing;
c) copies of documents certifying professional qualification;
d) a certification regarding professional experience.
(5) The State Revenue Service shall suspend the licence and make a note thereon in the register
in the following cases:
1) on the basis of a submission of the responsible outsourced accountant;
2) there is no valid civil liability insurance policy;
3) economic activity has been suspended;
4) the sole responsible outsourced accountant of the merchant has deceased;
5) an accounting programme without a licence is used for the conduct of accounting;
6) the information referred to in Section 39, Paragraph three of this Law has not been
submitted;
7) the responsible outsourced accountant has terminated employment relationship with
the outsourced accounting service provider and the outsourced accounting service provider does
not have another outsourced accountant registered with the State Revenue Service.
(6) The State Revenue Service shall cancel the licence and exclude the outsourced accountant
from the register in the following cases:
1) the outsourced accountant does not conform to the requirements laid down in
Section 34, Paragraph three, Section 37, and Section 38, Paragraph four of this Law or also
intentionally provides false information on the conformity with the requirements laid down for
an outsourced accountant;
2) the outsourced accountant systematically does not cooperate with the State Revenue
Service and does not provide the requested information;
3) the responsible outsourced accountant is included in the list of risk persons within the
meaning of Section 1, Clause 31 of the law On Taxes and Fees;
4) the legal address or address of the unit of the merchant of the outsourced accountant
or the address of the declared place of residence of the natural person who performs economic
activity conforms to the risk address within the meaning of Section 1, Clause 30 of the law On
Taxes and Fees;
5) within a year, it is repeatedly detected that the State Revenue Service has not been
notified of suspicious transactions which conform to the signs indicated in Section 22.2,
Paragraph three of the law On Taxes and Fees;
6) the outsourced accounting service provider, in performing economic activity, does
not fulfil the obligations specified in Section 15, Paragraph one of the law On Taxes and Fees,
evades taxes, or such circumstances have been detected which give evidence that the relevant
outsourced accounting service provider is involved in the performance of such activities that
are directed towards tax evasion;

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 7) the outsourced accountant has been excluded from the Commercial Register or the
taxpayer register;
8) the outsourced accountant – natural person – has deceased (if the outsourced
accountant is a natural person who performed economic activity);
9) on the basis of a submission of the outsourced accountant;
10) within a year since suspending the licence, its operation has not been renewed.

Section 39. Register of Outsourced Accountants

(1) Outsourced accountants are recorded in a publicly available Register of Outsourced

Accountants (hereinafter – the Register) which is maintained by the State Revenue Service on
its website.
(2) The information specified in Paragraph three of this Section shall be indicated in the
Register. The information shall be updated at least every five working days. The personal
identity number of natural persons is not made public in the public part of the Register.
(3) The following information on the outsourced accountant shall be recorded in the Register:
1) the name (firm name), registration number, or taxpayer registration code of the
merchant and the given name and surname of the responsible outsourced accountant, but for a
natural person performing economic activity – the given name and surname, taxpayer
registration code;
2) the number of the licence;
3) the date and basis of the issuance, suspension of operation of the licence or the
cancellation of the licence;
4) information on professional indemnity insurance of the accountant.
(4) If any of the information referred to in Paragraph three, Clauses 1 and 4 of this Section
changes, the outsourced accountant shall, within two weeks, submit a relevant notification to
the State Revenue Service.

Section 40. Civil Liability Insurance of an Outsourced Accountant

(1) An outsourced accountant has an obligation to insure his or her civil liability for the losses
caused as a result of professional activity or failure to act.
(2) The minimum liability limit for the professional civil liability insurance of an outsourced
accountant shall not be less than:
1) EUR 3000 if net turnover (revenues) of at least one customer from economic activity
in the previous reporting year does not exceed or is equivalent to EUR 300 000;
2) EUR 5000 if net turnover (revenues) of at least one customer from economic activity
in the previous reporting year exceeds EUR 300 000.

Chapter VIII
Administrative Offences in the Field of Accounting and Competence in the
Administrative Offence Proceedings

Section 41. Failure to Comply with the Procedures for Recording Cash

For failure to comply with the procedures for recording cash, a warning or a fine of up
to seventy units of fine shall be imposed.

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Section 42. Failure to Comply with the Provisions for the Conduct of Accounting, Failure
to Submit an Annual Statement and Consolidated Annual Statement

For failure to comply with the provisions for the conduct of accounting, failure to submit
an annual statement and consolidated annual statement to the State Revenue Service or the
Corruption Prevention and Combating Bureau within the specified time periods or for the
submission of an annual statement and consolidated annual statement not conforming to laws
and regulations, a warning or a fine of up to four hundred units of fine shall be imposed.

Section 43. Failure to Comply with the Procedures for the Registration and Use of Source
Documents

(1) For failure to comply with the procedures for drawing up, registration, and use of source
documents, a warning or a fine of up to eighty-six units of fine shall be imposed.
(2) For failure to comply with the procedures for drawing up, registration, and use of source
documents regarding transactions or activities involving excisable goods, a warning or a fine
of up to four hundred units of fine shall be imposed.

Section 44. Failure to Comply with the Procedures for the Use and Registration of the
Documents of the Supply of Goods

(1) For failure to comply with the procedures for drawing up, registration, and use of the
documents of the supply of goods, a warning or a fine of up to eighty-six units of fine shall be
imposed.
(2) For failure to comply with the procedures for drawing up, registering, and using such
documents of the supply of goods which refer to transactions or activities involving excisable
goods, a warning or a fine of up to four hundred units of fine shall be imposed.

Section 45. Competence in the Administrative Offence Proceedings

(1) Administrative offence proceedings for the offences referred to in Sections 41, 42, 43, and
44 of this Law shall be conducted by the State Revenue Service.
(2) Administrative offence proceedings for the offences referred to in Section 42 of this Law if
such offences have been committed by a political organisation (party) or an alliance of political
organisations (parties) shall be conducted by the Corruption Prevention and Combating Bureau.

Transitional Provisions

1. With the coming into force of this Law, the law On Accounting (Latvijas Republikas Saeimas
un Ministru Kabineta Ziņotājs, 1992, No. 44/45; Latvijas Republikas Saeimas un Ministru
Kabineta Ziņotājs, 1995, No. 3, 23; 1996, No. 24; 1999, No. 15; 2000, No. 10; 2003, No. 12;
2004, No. 6; 2006, No. 10; 2009, No. 9; Latvijas Vēstnesis, 2010, No. 102, 166, 2011, No. 65,
184; 2013, No. 87, 194, 250; 2016, No. 197, 241; 2017, No. 231, 236; 2019, No. 224; 2021,
37) is repealed.

2. The Cabinet shall, by 1 July 2022, issue the regulations referred to in Section 5, Paragraph
three, Section 6, Paragraph seven, Section 8, Paragraph four, Section 10, Paragraph three,
Section 11, Paragraph thirteen, Section 12, Paragraph four, Section 14, Paragraph four,
Section 15, Paragraph three, Section 18, Paragraph two, Clause 1, Section 21, Paragraph three,
and Section 23, Paragraph three of this Law. Until the day of coming into force of the
abovementioned regulations, but not later than until 1 July 2022, the following Cabinet
regulations shall apply, insofar as they are not in contradiction with this Law:

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 1) Cabinet Regulation No. 583 of 21 October 2003, Evaluation of the Property of the
Undertaking, also Claims and Liabilities in Accounting and Reflection Thereof in Financial
Statements when Terminating the Activity of the Undertaking or the Structural Unit Thereof;
2) Cabinet Regulation No. 584 of 21 October 2003, Regulations Regarding Recording
of Cash Operations;
3) Cabinet Regulation No. 585 of 21 October 2003, Regulations Regarding the Conduct
and Organisation of Accounting;
4) Cabinet Regulation No. 591 of 13 July 2004, Regulations Regarding Annual
Statements of Political Organisations (Parties) and Their Alliances;
5) Cabinet Regulation No. 808 of 3 October 2006, Regulations Regarding the Annual
Statements of Associations, Foundations, and Trade Unions;
6) Cabinet Regulation No. 928 of 14 November 2006, Regulations Regarding the
Annual Statements of Religious Organisations;
7) Cabinet Regulation No. 188 of 20 March 2007, Procedures for the Conduct of
Accounting in a Simple Entry System by Individual Merchants, Individual Undertakings, Farm
and Fishing Enterprises, Other Natural Persons Performing Economic Activity;
8) Cabinet Regulation No. 301 of 8 May 2007, Regulations Regarding the Annual
Statements of Individual Merchants.

3. Outsourced accountants are entitled to continue the provision of accounting services without
a licence not longer than until 1 July 2023. If an outsourced accountant (natural person) or the
responsible outsourced accountant does not have education corresponding to the requirements
laid down in Section 34, Paragraph two, Clause 2, Sub-clause “a” of this Law but has
corresponding experience in the field of accounting, his or her actual education may be
recognised, until 1 July 2025, as corresponding education for the responsible outsourced
accountant if he or she has commenced or continues studies corresponding to the
abovementioned requirements for education and, each year by 15 October, submits a statement
issued by the higher education institution to the State Revenue Service regarding successful
continuation of the studies. If an outsourced accountant (natural person) or the responsible
outsourced accountant has been granted a State old-age pension (also before the due time) or
he or she has reached the age which gives the right to receive a State old-age pension, or six
years or less have remained until reaching the age and he or she has corresponding education
in the field of accounting, in such case, without applying the requirements for education laid
down by law, he or she may receive the licence of an outsourced accountant the term of validity
of which is five years, but not longer than 1 July 2027.

4. Section 40, Paragraph two of this Law shall come into force on 1 January 2023.

5. Until the day when Section 40, Paragraph two of this Law comes into force, the minimum
liability limit for the professional civil liability insurance of an outsourced accountant shall not
be less than EUR 3000.

Informative Reference to European Union Directives

The Law contains legal norms arising from:

1) Directive (EU) 2017/1132 of the European Parliament and of the Council of
14 June 2017 relating to certain aspects of company law;
2) Directive (EU) 2015/849 of the European Parliament and of the Council of
20 May 2015 on the prevention of the use of the financial system for the purposes of money
laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European
Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament
and of the Council and Commission Directive 2006/70/EC.

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The Law shall come into force on 1 January 2022.

The Law has been adopted by the Saeima on 10 June 2021.

President E. Levits

Rīga, 28 June 2021

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