bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Wednesday 22.11.2017 | Name days: Aldis, Alfons, Aldris
LatviaLatvia

Economic Diary of Latvia. Big games over a small tax

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThere is room for miracles in life, especially right before Easter. It became known this week that once the most problematic bank in Latvia has become a successful enterprise.

Citadele Group concluded 2014 with a record profit index – EUR 32.4 million, which is 138% more than the year before. Citadele earned EUR 29.2 million last year, which is 91% more than the year before.

«In 2014, Citadele achieved the best result since the launch of business activity. In these four years the bank has transformed from a failing company into one of the most successful banks in Latvia, active creditor of the country’s national economy, stable employer and large taxpayer,» – says Citadele Council Chairperson Klavs Vasks.

Good financial indexes may become a reason for the review of the final sale price of this credit institution, as previously reported by the representative of the Privatisation Agency Guntis Karklins.

As previously reported, the deal for the sale of 75% of shares in Citadele bank owned by the state to American Ripplewood investment fund for EUR 74 million was signed on November 5th, 2014. Now this deal is close to its completion, so it is time to sort things out. The Finance Capital and Market Commission has sent a decision-making project to the European Central Bank. Citadele has subsidiaries in Lithuania and Switzerland. This is why it is necessary to obtain permission from authorities in these countries.

Big games over a small tax

Things are not going as well for parliamentarians who have failed to complete amendments to the Law on Micro-enterprise Tax this week. Members of the Budget-Finance Committee originally planned to tackle this matter on a meeting this Wednesday in order to complete everything prior to the break between parliamentary sessions. Unfortunately, deputies failed to reach an agreement on many important points. With that, the continuation of debates is planned for April 9th.

The final draft of amendments provides for maintaining the 9% tax rate only for the first three years of economic activity. It is also planned to set specific industries in which entrepreneurs will be allowed to receive the status of micro-tax payers. Finally, it is planned to gradually increase the level of compulsory social insurance fees in order for them to reach the average across the country – EUR 122.

In order to maintain the tax rate at the present level, EUR 7 million is required. The government has allocated this amount under the condition that all of the aforementioned norms will be reflected in the new redaction of the legislative regulation.

This relieved tax regime can be considered the most successful one, considering its popularity among the populace and enterprises. According to information from the State Revenue Service and Enterprises Register, the status of micro-tax payer has been provided to a total of 57,106 private and legal persons since September 2010. More than 100,000 people or 10% of all employed people in Latvia work in micro-enterprises.

The popularity of this tax regime has since turned against it: politicians believe it is being abused by businessmen as a form of labour tax optimization and micro-enterprise employees have minimal social guarantees and are therefore under a higher risk in the even of illness and unemployment later in life.

January 1st marked the coming into force of a new redaction of the law that provides for raising the tax rate to 11% for companies whose annual turnover is EUR 7,000.01 to EUR 100,000. Shortly after the approval of these amendments, politicians decided to rewrite this regulation. They still cannot come to an agreement.

We are losing them

It would be best if legislators could decide on the fate of the most demanded instrument in Latvia that allows residents to survive as soon as possible. This is because demographer Ilmars Mezs believes that Latvia will experience a sharp deficit of labourers after 2020. He believes deficit will impact engineering-technical professions and the country’s construction industry the most. Nevertheless, Latvia still has the opportunity to convince Latvians living abroad to return home.

While current return rates of Latvian migrants is 10-20%, it is planned to increase this proportion to 30-40%. The state should use financial stimulants, but very carefully, in order to make sure those still living in Latvia do not get the idea of also travelling to England in search of a better life.

It should be mentioned in this regard that the Environmental Protection and Regional Development Ministry has published an analytical report that contains many shocking facts. According to this report, Latvia’s population has declined by 25% over the course of 1990-2014. And this was ‘accomplished’ without any wars or natural disasters. According to estimates of Eurostat, if emigration in Latvia continues at the same rate, Latvia will have lost another 20% of its population by the year 2020.

Ref: 017.109.109.3754


Leave a reply

Jerošenko: Ušakovs offers unhealthy policy, Concord is used as Lembergs’ «satellite party»

«Cooperation between Concord [also known as Harmony] and Airvars Lembergs’ Union of Greens and Farmers has always existed. It existed even before Concord first appeared in Riga City Council. The situation is the same in the Saeima, even though Concord is in the opposition. Still, in situations when one or the other matter important to Lembergs appears, one does not have to be a great politologist to notice the ties between those parties...

Bosnian Serb commander punished with life imprisonment for Srebrenica

The UN the International Criminal Tribunal for the former Yugoslavia handed a life imprisonment sentence to Ratko Mladić after it found the former commander of Bosnian Serb forces guilty of genocide and crimes against humanity committed in the 1990s during the Bosnian War.

EC positive about Latvia’s 2018 budget project

Based on the conclusion from the European Commission, Latvia’s budget project for 2018 fully fits conditions listed in the Stability and Growth Pact. In accordance with EC’s estimates, the structural balance of Latvia’s general budget is viewed at -1.8% of GDP. Government budget expenditures, on the other hand, are expected to grow by 7.1 percentage points.

Producer price level in Latvia declined 0.2% in October

Compared to September, the level of producer prices in Latvian industry dropped by 0.2 % in October 2017. Prices of products sold on the domestic market decreased by 0.5 %, while prices of exported products went up by 0.1 %.

Vaškevičs feels «harsh but fair» attitude from court justice system in Austria

Former deputy director of Latvia’s State Revenue Service Vladimirs Vaškevičs, who is accused of bribery and whose extradition from Austria has been a priority for Latvian authorities for some time now, says he feels «harsh but, thank God, fair» attitude from the Austrian court justice system.

Antāne: lost Russian cargoes have cost Latvia nearly 50 million in nine months

Latvia’s economy has lost nearly EUR 50 million in nine months because of missed Russian transit cargoes. While Russian Railway had approved 90% of oil and coal cargoes for transit through Ventspils port at the beginning of the year, this amount had declined to a mere 5% by September, says Baltic Association – Transport and Logistics President Inga Antāne.

In pictures: Museum of painter, Holocaust survivor Bak opened in Vilnius

In Vilnius, a museum to Jewish-Polish painter Samuel Bak has been opened. During the occupation of Lithuania by the Nazi Germany, the artist survived the Holocaust in the country.

Ratio of old people and invalids on a rise among unemployed people

The total number of unemployed people has been decreasing in recent years. However, the ratio of old people and invalids continues increasing in the ranks of unemployed people. On top of that, the number of lasting unemployed people remains high and largely unchanged in the country.

Saaremaa looking into possible ferry traffic to Latvia

The local government of the largest Estonian island is looking into possible interest of five shipping companies in opening ferry traffic between Saaremaa and Latvia.

Balta: exhaustion and overload are the most common causes for accidents at work

More than EUR 20,000 has been paid in compensations for injuries acquired at work this year so far, according to information from insurance association Balta. Compared with the same period of last year, the number of accidents has grown 40%.

Estonian town tempts population to reregister with spa in Latvia and 100 euro payment

The town of Keila, located 25 kilometres away from Tallinn, has started a one-and-a-half month campaign to motivate its residents to register back in the town as many of them have registered in the Estonian capital, which grants free public transport to its population.

EU to impose fine to Poland if logging in Białowieża forest not stopped

The European Court of Justice has issued to Poland a 15-day deadline to provide proof that the country has fulfilled the court's ruling to quit logging in the ancient Białowieża forest threatening with a daily fine of 100 000 euros if it fails to prove this.

Rīgas namu pārvaldnieks: building restoration will be next year’s priority

Rīgas namu pārvaldnieks plans to focus on improving technical state of its managed buildings. The company plans to restore several dozen buildings next year and up to 100 buildings a year in the next five years, says RNP chairman Aivars Gontarevs.

LCB: even deputies should fulfil their promises

Latvijas ceļu būvētājs, which is an association in Latvia with ties to multiple road and bridge construction companies, invites deputies to support the proposal for the restoration of the State Road Fund, BNN was told by the association’s chairman Andris Bērziņš.

Russia rejects claims of nuclear accident despite radioactive cloud over France

Russia has stated that a nuclear accident has not taken place in its territory although its weather service has found high amounts of traces of a radioactive isotope.

Study: taxes for business in Latvia – the most attractive among Baltic States

Latvia’s tax system is the most attractive among Baltic States and 13th most attractive among 190 countries of the world, according to the latest study performed by the World Bank and PricewaterhouseCoopers on tax systems around the world.

Turkish journalist punished with prison term for tweet

A court in Turkey has sentenced on Tuesday, November 21, a journalist from opposition newspaper Cumhuriyet to three years behind bars over accusations of spreading terrorist propaganda in relation to a post on Twitter, which had been briefly on the microblogging site this spring.

Latvia – 35th country in the world ICT development-wise

This year Latvia reached 35th place in the world in terms of development of information and communication technologies, as mentioned in the latest report by UN International Telecommunication Union.

Instant payment infrastructure comes online in Europe

On Tuesday, 21 November, instant payment infrastructure will be introduced across Europe. On top of that, European banks’ founded EBA Clearing will also introduce its RT1 instant payment system. The European-level solution has also been coordinated with the instant payment processing infrastructure prepared by the Bank of Latvia in August 2017, as reported by the bank.

Police dismantle criminal group that caused damage worth seven million euros to the state

Latvian State Revenue Service’s Finance Police dismantled a criminal group in November 2017. A total of 34 searches were performed and two people were found suspect. The criminal group performed tax avoidance and money laundering operations, causing damages worth nearly seven million euros to the state, BNN was informed by SRS.

Zariņš: deputies who vote for the state budget without amendments will have breached their vows

It is unacceptable for the Saeima coalition to follow the Cabinet of Ministers and like the Cabinet of Ministers breach laws during the budget approval process, says Saeima member Ivars Zariņš, adding that deputies who vote for the budget without amendments will thereby have to breach the vow they had previously made to the Latvian nation.

Estonia’s ruling Centre Party shows door to 31 competing members

The leadership of Estonia's Center Party has accepted the proposals of the party's local branches on fellow members, who ran in the Estonian municipal elections this autumn from a separate list, and expelled 31 members from the political party.

Pabriks: state interests should be held higher than party interests

Latvia cannot be allowed to drown in provincialism. It is in the country’s interest to maintain a course towards European and NATO values. In a situation when the number of centric and European-oriented parties is large, it is becoming harder and harder, because it leads to political fragmentation, and the main goal of it is reaching the 5% barrier during elections, not ensuring growth and development for Latvia, says MEP Artis Pabriks.

Reacting to e-commerce growth, Omniva rushes to expand its parcel locker network

Estonian state-owned postal company Eesti Post, which operates the Omniva brand, stated that it will broaden its network of parcel lockers expand its current parcel machines up until Christmas.

Programme: introduction of ‘honest’ taxi counters is stuck

Taxi drivers that had to replace their counters as far back as 15 October, continue delaying the process, as reported by De Factor with reference to State Revenue Service.