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Tuesday 20.02.2018 | Name days: Smuidra, Vitauts, Smuidris
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Economic Diary of Latvia. Harder to dodge taxes now

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOn the eve of putting down his duties as Finance Minister of Latvia Andris Vilks signed a multilateral agreement on international automatic exchange of information regarding financial accounts.

Experts have already described this event as refusal of banking secrets and a gigantic step toward obliterating tax oases.

Based on this agreement, tax institutions will automatically exchange information about residents’ bank accounts, including information regarding beneficiaries, interest payments, dividends, account balance, income from insurance products, interest from financial deposits, etc. The exchange of information will include legal persons and private persons. The first exchange of information will take place September 2017.

This document was signed during a global forum of OECD in Berlin October 29th. It is dedicated to transparency and exchange of information for better tax administration.

«The signing of this declaration is a step toward reducing shadow economy in cooperation with other countries. It is also brings Latvia one step closer to becoming a member of OECD,» – said Andris Vilks.

Everything is according to schedule

Meanwhile in Latvia, in spite of slower economic growth, budget revenue from taxes is above last year’s indexes, as reported by Latvian Finance Ministry.

In particular, revenue of the consolidated budget for the nine months of 2014 has grown by 1.4% (EUR 88.1 million) in comparison with last year. General tax revenue has increased 4% (EUR 189.7 million).

Experts explain better results with positive results of measures aimed to combat shadow economy. The campaign to control and check car service stations is mentioned as an example. Following this campaign, wages in this sector increased by nearly EUR 500,000 this August.

Revenue growth of the state consolidated budget was largely possible because of increased administration of PIT – the increase was 8.5%. This trend is explained with increased administration with reduced payments, part of which were carried out in December 2013. At the same time, a notable increase in the administration of real estate property tax was noted in consolidated budget of municipalities – 9.3% or EUR 13 million. Indexes have improved thanks to increased cadastral value and timely payment of the tax.

Minimal wages may be increased

One of the most direct promises of Prime Minister Laimdota Straujuma’s government is the plan to increase minimal wages by EUR 40 next year. The current set minimal wage is EUR 320 in Latvia.

The government’s declaration also mentions that this growth will continue next week.

Starting with 2016 the government plans to introduce tax-free allowance, increasing it for recipients of small wages and maintaining it for people with higher income. The mechanism will not be applied to large salaries at all.

The government also promises to increase benefits for dependants. Among other things, the Cabinet of Ministers plans to resolve the problems of long-term and regional unemployment by supporting employment in risk groups. The government is certain programmes for requalification of unemployed persons have to be coordinated with needs of the national economy and training should be carried out at specific enterprises.

Life is becoming better in Latvia

The car market, which is considered the reflection of a country’s state of economy, is reported to have an increase in activity.

According to CSDD, a total of 52,939 lightweight cars have undergone first registration in Latvia in the first nine months of 2014, which is 12.7% more than in the same period of 2013.

7,521 trucks have been registered in Latvia this year (+0.3% more than in 2013), 345 buses (-8.7%), 1,930 motorcycles and tricycles (+21.2%), 171 quadricycles (+33.6%) and 4,874 trailers and semi-trailers (-7.3%).

A total of 69,561 vehicles have been registered in Latvia in the first nine months of 2014, which is 8.8% more than in the same period of 2013.

In order to make sure there is a surface for vehicles to drive on, Transport Ministry has calculated that the total funding for roads may reach EUR 357 million in 2015. The ministry has also submitted a request to the government to allocate an additional EUR 47.9 million for repairs of regional and local roads. If funding is allocated, repairs will be carried out in 46 locations, and if not, repairs will be carried out only in 7 locations.

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