Court rules board members are responsible for company tax payments

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Latvia's Constitutional Court ruled November 15 that a provision in the Law on Taxes and Fees, which stipulates that a company's board members can be held responsible for the company's late tax payments, does not go against the Constitution.

The Constitutional Court's ruling cannot be appealed, Lina Kovalevska, aide to the Constitutional Court's chairman, told LETA.

A petition contesting the said provision in the Law on Taxes and Fees was submitted to the Constitutional Court by a group of twenty Saeima opposition members, who claimed that the provision went against residents' right to property as described in the Constitution's Article 105, as well as articles 91 and 92 of the Constitution.

In particular, the MPs argued that there are companies that can only use their property to cover their liabilities, albeit not the property of persons who own the company or persons who work on the company's board, therefore the disputed legal provision is not in line with the Constitution's Article 105.

The petition also says that the disputed legal provision goes against the Constitution's Article 91 as it discriminates against companies' board members as compared to other persons who have the right to take decisions affecting a given company or assume obligations in the company's name.

Finally, the petition says that the legislation violates the presumption of innocence and therefore contradicts Article 92 of the Constitution, as members of a company's board are to be held responsible should the company be late with its tax payments, and have a duty to prove their innocence.

The Constitutional Court found, however, that the disputed legal provision was not disproportionate and did not contradict the Constitution.

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