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Latvia operates a VAT refund mechanism on bad debts for Latvian taxpayers.

If the value of a supplier's bad debt for one recipient of goods or services without VAT is less than €1,000, a taxable person has the right to reduce the amount paid into the state budget by the amount of the VAT of the bad debt if all the following conditions are met:

1. Ìý

   (a)ÌýÌýÌýÌý The invoice or VAT invoice has been issued for the goods supplied/services provided in accordance with the legal requirements.

2. Ìý

   (b)ÌýÌýÌýÌý The respective debt has been incurred during the last three tax years.

3. Ìý

   (c)ÌýÌýÌýÌý VAT has been calculated for the transaction performed and it has been included in the VAT return for the relevant taxation period.

4. Ìý

   (d)ÌýÌýÌýÌý The amount of the bad debt has been written off from the amount of special provision for bad debts or directly as losses (expenses) in the taxable person's book-keeping in the current taxation period or in any previous taxation periods.

5. Ìý

   (e)ÌýÌýÌýÌý The recipient of the goods/services and