Approximately 50 thousand used cars are imported to Latvia. In addition, 60 thousand cars are already available for sale in the country. According to official data, there are close to 600 companies in Latvia that work in used cars segment. Often used cars sales are carried out between private persons as well.
There have been multiple problems related to Latvia’s used cars market – the grey zone, uneven competition, losses for the state and credibility of buyers. This is why Latvian State Revenue Service has been working with Road Traffic Safety Directorate and Auto Asociācija since 2014 in order to improve the situation on the used cars market. Certain proposals have surfaced as a result of this cooperation: stricter rules for the market, mandatory requirements for documents and others. All proposals have been added to amendments for Cabinet Regulations No. 876 ‘Vehicles and their numbered units trade rules’. It is planned that these rules will come into force on 1 January 2016.
SRS, when carrying out control measures in 2015, mainly focused on the registration of used vehicles, accounting and submission of documents accompanying transactions. In general, violations uncovered in this industry demonstrate dishonesty in declaring income acquired in full. The same applies to illegal employment and even envelope wages.
SRS carried out 92 thematic inspections since May 2015. In 69 cases SRS applied fines in accordance with Latvian Code of Administrative Violations. The total size of fines comes to EUR 38.2 thousand.
In 2015, 540 vehicle trade locations were excluded from the Vehicles and their numbered units trade register. Approximately 470 trade locations were excluded because they experienced no sales for more than six months. Approximately 40 trade locations were excluded from the register following decisions from SRS to close down economic activities.
Approximately 30 companies have been warned for not complying with trade rules and possible consequences that will follow any repeated violations.
Amendments to rules help clarify existing requirements and introduce a couple of new ones. From the perspective of consumer protection, a very welcome change is related to provision of information about the vehicle’s technical state and specifications. Control over payments of taxes applicable for specific deals will be made easier for supervisory institutions. The amendment project also includes measures to provide for the issue of receipts and other accounting related documents in accordance with regulations, explains SRS.
In addition to amendments, it is also planned to reduce the administrative burden on entrepreneurs, by abolishing the previously applied practice of complicated accounting forms. Information regarding transfer of ownership rights will be delivered online from the trade company to the register.
SRS, CSDD and Auto Asociācija will continue their cooperation to sort out the used cars market, reduce unfair entrepreneurship and improve consumer protection.