With regard to the measures implemented in line with BEPS Action 2 recommendations, we note that Latvia has transposed the EU Council Directive (EU) 2016/1164 of 12 July 2016, which lays down rules against tax avoidance practices that directly affect the functioning of the internal market, as well as the EU Council Directive (EU) 2017/952 of 29 May 2017, which amends Directive (EU) 2016/1164 regarding hybrid mismatches with third countries, in accordance with the applicable transposition rules.

Article 7.1 (Hybrid Mismatches) of the Enterprise Income Tax Law provides: 
- If the consequences of a hybrid mismatch are double deduction, then:
1) if the Republic of Latvia is the investor jurisdiction, the taxpayer shall increase the taxable base by the amount of deduction which has been deducted from the taxable income also abroad.
2) if the Republic of Latvia is the disburser jurisdiction, however, the taxable base has not been increased by the amount of deduction in the investor jurisdiction for the purposes of taxation, the taxpayer shall increase the taxable base by the amount of deduction;
3) the taxpayer has the right to reduce the dual inclusion income occurring in a taxation or post-taxation period for any such deduction.
- If the consequences of a hybrid mismatch are deduction without inclusion :
1) and if the Republic of Latvia is the disburser jurisdiction, the taxpayer shall increase the taxable base by the amount of deduction which has not been appropriately taken into account for determination of the taxable income abroad for the purposes of taxation;
2) and if the Republic of Latvia is the payee jurisdiction and the taxable base has not been increased by the amount of deduction abroad, the taxpayer shall increase the taxable base by the amount of income which was not taken into account when calculating the taxable income;
 - In addition, law provides: 
Hybrid Mismatches & Deductible Payments:
The taxable base is increased by any payment that leads to a hybrid mismatch (e.g. double deduction or deduction with no inclusion) between associated enterprises or within a structured arrangement — unless another jurisdiction has already made an equivalent adjustment.
Disregarded Permanent Establishments (PEs):
Income from a disregarded foreign PE must be included in the Latvian tax base, unless an applicable tax treaty with a non-EU country exempts it.
Hybrid Transfers (e.g. financial instruments):
If a tax rebate (e.g. withholding tax relief) is claimed by multiple parties, Latvia limits the taxpayer’s rebate to the portion of net taxable income actually earned.
Hybrid Entities with Foreign Ownership:
A Latvian hybrid entity (transparent for Latvian tax) may be treated as a tax resident if it is 50%+ owned by non-residents from countries that treat it as a taxable person, and the income is otherwise not taxed elsewhere. This does not apply to regulated collective investment undertakings.
Dual Resident Entities & Double Deductions:
If a taxpayer is a resident in both Latvia and another country, and deductions are claimed in both, Latvia increases the taxable base unless the other country offsets the double deduction with dual-inclusion income. If both countries are EU Member States, and the taxpayer is deemed non-resident in Latvia under a tax treaty, the adjustment still applies.