As a licensed platform, Debitum must regularly “conduct internal and external audits.”
The latest external audit was performed by Grant Thornton International in October 2022. The subject of this audit was “to inspect how well are managed investors funds and to examine platforms’ procedures and financial records compliance with Financial instruments market law (FIML, Latvia).”
The scope of the audit:
Henrijs Jansons, CEO of Debitum reflects on the audit, stated:
“During this last audit, Debitum management team and employees were interviewed. Our internal regulatory enactment activities with financial instruments were analyzed. Accounts were checked to ensure that Debitum and investors’ funds are kept separate. Randomly selected contracts, documents, and statements were examined for any inconsistencies, inappropriate usage of investors’ funds, absence of regular investigations of competence and reputation of Debitum Loan Originators, and other not less important checks. The evaluation of the audit showed Debitum procedures and operations are in line with FIML requirements.”
Debitum team is “delighted about the result of the audit.” It highlights “the correctness of Debitum performance, gives another guarantee to our clients, promotes transparency and professionalism of the company, and provides support to the company’s management team to keep operations at the highest level.”
As noted in the update, Grant Thornton claims it is “one of the world’s leading organizations of independent assurance, tax, and advisory firms.” With headquarters in London, England, they are “operating in the Baltic States since 1992, carrying out statutory audits of the annual accounts of public-interest entities.”
The lowered withholding tax rate “is in force for private investors EU / EEA tax residents.” The law change is “effective from 14 November 2022.”
As mentioned in another update, the withholding tax for private individuals “from EU/EEA countries is reduced from 20% to 5%.” In addition, “since the law changes are in place, the taxation process is simplified, as investors now have to confirm their tax residence once and for all. No certificates and additional documentation are needed.”
Moreover, “to benefit from the 5% tax rate (if you are EU/EEA tax resident) you as an existing investor don’t have to make any additional actions on Debitum platform.” The new tax rate will be “applied automatically from day one of the new law – 14th of November.”
Unfortunately, changes in the law “will affect all investors from all counties who had submitted tax residence certificates and they will face tax deductions depending on the tax residence country from 0% to 10% withholding tax.”
The positive is “that State Tax authorities have told us our investors will be able to claim tax refunds by submitting the tax refund form.” During December the firm “will provide the form for download in your Debitum profile and will assist in filling it correctly.”
It means on Debitum platform from the 14th of November:
- all individual investors from EU/EEA have a 5% withholding tax instead of a 20%
- for Latvian investors tax rate remains as before – 20%
- the reduced rate doesn’t apply to investors who are not tax residents of EU or EEA countries
- for investors from other countries, the standard withholding tax rate will be applied – 20%.
The rate “can be reduced if the investor submits a tax residency certificate.”
As clarified in the update, investors who are tax residents of Lithuania “can reduce the tax rate to 0% if they submit a tax residence certificate.” And the law changes also doesn’t apply “to legal entities, which are not subject to tax withholding and remain at 0%.”
The changes in the law “have entered into force earlier than planned (in October 2022 it was announced to become in force from January 2023), therefore monthly income payments for our investors for November will be calculated and paid in the upcoming days.”
Debitum’s IT department is “working to implement all necessary system updates to comply with new law requirements.” This is their priority number one and “will be finished as soon as possible.”