Government drawing up sanction support plans

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With initial reassurances that imposing sanctions against Russia would not have a serious impact on the Latvian economy seemingly abandoned in the wake of Russian counter-sanctions, the government has begun drawing up plans to support businesses likely to be affected.

The Latvian cabinet of ministers at its August 12 meeting backed wide-ranging plans for state aid to firms whose exports to Russia exceed 10% of total sales.

“Incentives will also be granted to taxpayers whose activities are related to the export and production of goods (at least 10% of total sales), which are subject to sanctions, or supply raw materials to the above-mentioned companies,” a statement by the cabinet office said.

The full details of the support to be made available remain to be decided with the Economics Ministry, Finance Ministry, Transport Ministry and Agriculture Ministry all charged with drawing up proposals and necessary legislative amendments within two weeks that will “provide for a grace period of up to one year for economic operators affected by Russia’s sanctions”.

The cabinet also urged companies to investigate whether they might already be eligible for help from existing structures such as the Latvian Guarantee Agency.

In addition the Economics Ministry was told to “make amendments to a number of EU funds support programs, providing additional funding to continue to support entering of Latvian entrepreneurs in foreign markets.”

“The government decided that, in case of necessity, the Ministry of Agriculture, in cooperation with other Member States of the European Union, will have to apply to the European Commission with a request to decide on excess of national milk quota levies, as well as to temporarily reinstate export refunds, to start intervention purchasing and private storage aid,” the cabinet statement said.

“In order to mitigate the impact of sanctions on the road carrier sector, the Ministry of Transport will have to coordinate with the European Commission the amendments to the Law On Vehicle Operation Tax and Company Car Tax to abolish the vehicle operating tax for vehicles exceeding 3500 kg,” the statement added.

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