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Tax Accounting

Course developer

Course abstract

The course aims to build up knowledge of the procedure for calculating taxes, as well as an understanding of the basic principles of tax policy and their impact on the shadow economy. The course provides knowledge about the kinds of taxes, the liabilities, rights and responsibilities of a company as a taxpayer, and the impacts of the shadow economy on the national economy. During the course, students learn the procedures for calculating, declaring and paying taxes, as well as an understanding of the nature of the shadow economy.

Learning outcomes and their assessment

Students will be able to demonstrate:
KNOWLEDGE of
• the obligations and rights of a taxpayer (independent work, test, examination).
• the role of taxes in the government budget, as well as the basic principles of tax policy (independent work, test, examination).
• the kinds of taxes, the rates, the tax payment and calculation procedures, as well as the requirements for preparing tax returns (independent work, test, examination).
• the elements of the shadow economy and their negative impact on long-term economic growth in the country (independent work, test, examination).
PROFESSIONAL SKILLS to
• perform tax calculations and explain them (independent work, test, examination).
• apply different tax payment regimes (independent work, test, examination).
• fill in tax returns (independent work).
• describe the elements of the shadow economy and analyse their impacts on economic growth in the country (independent work, test, examination).
SOFT SKILLS to
• prepare tax returns (independent work).
• calculate various taxes (independent work, test, examination).
• explain and assess the impacts of the shadow economy on the national fiscal policy (independent work, examination).
COMPETENCES to
• formulate, describe and analyse the basic principles of tax policy (independent work, test, examination).
• independently calculate taxes (independent work, test, examination), based on the acquired knowledge and skills.
• independently connect theory with practice, applying the acquired theoretical and practical knowledge (examination).
• explain and analyse the impacts of the shadow economy on economic growth in the country (examination), based on the acquired knowledge.

Course Content(Calendar)

Full-time studies:
1. Obligations of a company as a taxpayer.
Procedure for registration with the State Revenue Service. General procedures for calculating, paying and declaring taxes. Procedure for using strict accounting documents. Declaration of cash transactions. The shadow economy and its impact on the fiscal sustainability and economic stability of the country (lecture - 1 hour).
2. The rights and responsibility of a company as a taxpayer.
Electronic declaration. Extension of the tax payment deadline. Correction of tax declarations. Recovery of overpaid taxes. Kinds of SRS inspections. Outstanding tax debts and penalties. Procedure for contesting and appealing SRS decisions. Shadow economy restriction plan (lectures - 2 hours, practical - 1 hour).
3. Calculation of and accounting for payroll taxes.
Calculation of and accounting for payroll taxes. Calculation of and accounting for payroll tax relief. Calculation of and accounting for mandatory state social insurance contributions. Preparation of payroll registers and tax returns. Impacts of the shadow economy elements “under-declared employment” and “envelope wages” on the prosperity of society and economic development (lectures - 4 hours, practicals - 6 hours).
4. Calculation of and accounting for mandatory state social insurance contributions.
Insurable persons and taxable incomes subject to mandatory contributions. Kinds and rates of state social insurance (lectures - 2 hours, practicals - 2 hours).
5. Calculation of and accounting for personal income tax.
Withholding the personal income tax from the incomes of individuals and tax reports. Preparing an annual income tax return (lectures - 2 hours, practicals - 3 hours).
6. Calculation of and accounting for self-employment taxes.
Tax options for self-employed persons, the differences, accounting for and the declaration of the taxes. The personal income tax and mandatory state social insurance contributions paid from economic activity. Micro-enterprise tax. Reduced patent fee. Impacts of undeclared income on the social protection of the self-employed (lectures - 5 hours, practicals - 5 hours, Test 1 - 2 hours).
7. Calculation of and accounting for company car tax.
Tax calculation and payment procedures. Tax exemptions (lecture - 1 hour)
8. Calculation of and accounting for immovable property tax.
Taxable properties and tax rates. Tax payment procedure. Tax exemptions (lecture - 1 hour).
9. Calculation of and accounting for natural resource tax.
Taxable natural resources and tax rates. Tax payment procedure. Tax exemptions and the options (lecture - 1 hour).
10. Calculation of and accounting for excise tax.
Taxable items and tax rates. Tax payment procedure. Tax exemptions (lecture - 1 hour, Test 2 - 1 hour).
11. Calculation of and accounting for value-added tax.
Value-added tax rates, reverse charge procedure, special tax regimes. Registration as a value-added tax payer. Accounting for transactions subject to and exempt from value-added tax. Calculation of and accounting for value-added tax and input VAT. Declaration of value-added tax. Activities of unregistered companies and the impacts of undeclared revenues on the sustainable development of the national economy (lectures - 8 hours, practicals - 8 hours).
12. Calculation of and accounting for enterprise income tax.
Categories of enterprise income taxpayers: residents and non-residents. Calculation of the tax base. Tax relief and discounts. Classification of costs not related to economic activity. Declaration of enterprise income tax (lectures - 4 hours, practicals - 4 hours, Test 3 - 2 hours).
Part-time studies:
All the topics intended for full-time studies are covered, yet the number of contact hours is ½ of the specified number of hours

Requirements for awarding credit points

Upon completing the course, the student must take an examination. The assessment is cumulative and consists of:
• Test 1. Obligations, rights and responsibility of a company as a taxpayer. Calculation of payroll taxes, calculation of self-employment taxes, withholding PIT from the income of an individual. The role of the shadow economy in the national economy (20%).
• Test 2. Calculation of and accounting for company car tax. Calculation of and accounting for immovable property tax. Calculation of and accounting for natural resource tax. Calculation of and accounting for excise tax (10%).
• Test 3. Calculation of and accounting for value-added tax. Calculation of and accounting for enterprise income tax. Accounting for and analysis of shadow economy elements (20%).
• Independent work. Tax calculations, preparation of tax returns and an essay on the shadow economy (10%).
• Examination. Theoretical questions and calculations on all the taxes. Open questions on the impacts of the shadow economy on the fiscal sustainability and economic growth of the country (40%).

Description of the organization and tasks of students’ independent work

The student must independently learn and consolidate theoretical materials, study the relevant legal framework and prepare for independent work, tests and an examination.
Homework 1. The nature of taxes. The student gives answers to a test and open-ended questions about the nature of taxes and the shadow economy and submits it electronically at the time specified by the faculty member.
Homework 2. Remuneration calculations and accounting. The student must complete reports on employees and their remuneration and submit them electronically at the time specified by the faculty member.
Homework 3. Accounting for and calculation of self-employment taxes, theoretical questions and calculations. The student gives answers to theoretical questions about the personal income tax and fills in a tax return and submits it electronically at the time specified by the faculty member.
Homework 4. The student gives answers to theoretical questions about value-added tax and performs calculations, fills in a VAT declaration and submits it electronically at the time specified by the faculty member.
Homework 5. The student writes an essay on the shadow economy and measures to limit it and submits it electronically at the time specified by the faculty member.

Criteria for Evaluating Learning Outcomes

The final mark on the course depends on the marks on tests and the examination. 10% are equal to one point on a 10-point marking scale.
The assessment is cumulative and includes the following components: independent work (10%) (all the pieces of independent work must have a passing mark), Test 1 (20%), Test 2 (10%), Test 3 (20%) and an examination (40%).

Compulsory reading

1) Jurušs M. Nodokļi. Rīga: RTU Izdevniecība, 2019, 176 lpp.
2) Leibus I. Uzņēmuma darbības uzsākšana, grāmatvedība un nodokļi. Rīga: Lietišķās informācijas dienests, 2019, 173 lpp.
3) Leibus I. Pašnodarbināto grāmatvedība un nodokļi. Rīga: Lietišķās informācijas dienests, 2022, 260 lpp.
4) Leibus I., Pētersone I., Jesemčika A., Leibus I., Svarinska A. Grigorjeva R. Finanšu grāmatvedība. Mācību grāmata. Rīga, 2020, 319 lpp.

Further reading

1) Jurušs M. Nodokļu plānošana Latvijā un starptautiskā vidē. Rīga: Rīgas Tehniskā universitāte, 2021, 208 lpp.
2) Ketners K. Nodokļi un nodokļu plānošanas principi. Rīga: Tehnoinform Latvia, 2018, 321 lpp.

Periodicals and other sources

1) LR likumi un MK noteikumi: Latvijas Vēstnesis. Pieejams: www.likumi.lv
2) Bilance Rīga: Lietišķās informācijas dienests
3) Bilances Juridiskie Padomi. Rīga: Lietišķās informācijas dienests.
4) iFinanses.lv Rīga: Izdevniecība iŽurnāli, 2013 Elektronisks žurnāls. Pieejams: www.iFinanses.lv
5) plz.lv Rīga : Lietišķās informācijas dienests, Elektronisks žurnāls. Pieejams: www.plz.lv
6) Valsts ieņēmumu dienesta mājaslapa. Pieejams: www.vid.gov.lv
7) Taxation trends in the European Union. Data for the EU Member States, Iceland and Norway. Pieejams: http://ec.europa.eu/taxation_customs/resources/ documents/taxation/gen_info/economic_analysis/tax_structures/2021/report.pdf

Notes

Compulsory course for the academic bachelor programme Economics, specialization Accounting and Finance