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AtmosClear SA
The «hidden» costs of doing
business in Latvia
Matiss Paegle
April 5, 2013
AtmosClear
Renewable Energy
AtmosClear SA identifies,
develops and finances
sustainable and renewable energy
projects for associate Clean and
Green Funds
Strategy
Transactions
Markets
Technology
Waste to Energy
Solutions
AtmosClear – one of the largest FDI in Latgale
Estimated Total Investment ~32 MEUR in Rezekne Free Economic Zone
Operational 130k tons/pa pellets plant 17MEUR
100% equity; no bank loans
Planned 4MW Biomass CHP Project 15 MEUR
Total ~32 MEUR
Rezekne Operations – unexpected surprises
• Normally investors plan the total investment budget (including working capital & contingencies)
• On top of the regular contingencies, we had a very unexpected one – VAT & IRS !!!
Operations started December 2010
VAT Receivable (TEUR):
Jan 2011
132
Feb 2011
265
The initial review
Mar 2011
421
Apr 2011
604
May 2011
362
The 2nd thematic review
Jun 2011
316
Jul 2011
389
Aug 2011
336
The 3nd thematic review
Sep 2011
428
Oct 2011
575
Nov 2011
702
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•
•
•
•
•
Rezekne afraid/unskilled/unmotivated to
take decisions – wait months for Riga OK
Rotation of inspectors each month
No internal system to see what is checked
– each month start from scratch
On the last day of deadline for VAT
reimbursal, they always ask for formal
additional info/translations/etc and extend
the deadline
The latest – reimbursal delayed 75 days –
subject to repeated review by Riga
Only after a personally arranged meeting
with a top IRS oficial, the problem was
resolved in two days
• If not for our own deep pockets, we would be insolvent even before starting to operate normally
Lessons to learn:
• IRS is RE-active, not PRO-active
• Do not waste time trying to solve problems locally with
individual managers... They will not be solved!
GO DIRECTLY TO THE TOP OFICIALS!
Tax audits
• Tax audits are performed where they are easier to be carried out. If you have no accounting –
there is nothing to audit; when you have a proper accounting – their job is easier
• Don’t be surprised - you will always be fined something
• Timing of audits will never take into account possible problematic situations at the company
• Our case:
• Penalty of 10.000 LVL for just improperly filed documents, even though no harm done to the tax amounts
• This is excessive punishment for a simple administrative mistake of an accountant
• Legal battle will take years and cost more... But the penalty amount is already collected
Conclusion
• We need a service oriented organisation, which helps
companies to do the right thing and not punish simple
mistakes
• IRS should focus on real criminal activities and tax fraud,
not waste time with «good citizens»
AtmosClear SA
Thank You!
AtmosClear SA
Chemin du Polny 12B
1066 Epalinges
Suisse
 : +41 21 906 1000 Swiss Office
 : +371 266 888 68 Mobile
 : [email protected]