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Wednesday 21.03.2018 | Name days: Una, Unigunde, Dzelme, Benedikts

Economic Diary. Latvia now has “red jackets”

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Аuthor: REUTERS/SCANPIXThe Red Jackets export aid movement has become active in Latvia. This organization plans to popularize product and service providers that have notable and recognizable brands. The idea for the name of this movement was given by ex-president of Latvia Vaira Vike-Freiberga.

Export’s image to be improved

Once, during an international conference, Vaira Vike-Freiberga had changed her style and put on a red suit, which stood out in the background of grey suits of other presidents. This made everyone take notice of her.

GatewayBaltic, Zimolu ligzda Matka and DDB marketing firms and the Latvian Chamber for Trade and Commerce. There is already a list of Top 10 exporters.

Results of the Rising Star contests will become known at the end of April. Ten best companies will receive a special “Red Jackets Inspiration book”and a package of consultancy services. 25 red jackets will be awarded to the best exporters that take care of their brands.

Meanwhile, GatewayBaltic and the Stockholm School of Economics have presented a survey that compiles brand assessment of 1 150 manufacturers and 400 service providers. The conclusion: the recognition of Latvian products on foreign markets is not good at all. According to Economy Minister Daniels Pavluts, Latvian producers are not in any shape to compete with, say, China in terms of production volume. Latvia’s motto – offer high quality for a competitive price. A well planned marketing strategy is vital here. This includes the increase of recognition of a company’s brand.

Fast credits to be slowed down

The Economy Ministry has finally specified the proposals for the regulation of the fast credit industry – something that is growing rapidly in Latvia and the EU and is being poorly regulated. Companies of non-banking crediting sector issued a total of 247 million LVL as credits in 2012. This includes 115 million LVL as fast credits. Firms in this sector have taken up self-regulating measures. Nevertheless, the Economy Minister believes this is not enough.

In particular, it is planned to introduce an annual interest rate cap – 100%. It is also planned to ban advertisements of fast credit services that claim this is a good way to solve financial problems. Services of this kind are not to be provided in the evening and night hours (20:00 to 08:00). This will minimize spontaneous borrowing. Finally, in case of payment delays for half a year will have penalties count 1% per month, then – 6% per year. An entire package of other measures planned to expand the authority of the Consumers’ Rights Protection Centre.

All the best for entrepreneurs

Another initiative of the Economy Ministry stands to improve Latvia’s business environment at the expense of introducing e-services. According to the ministry’s plan, which was approved by the government this week, electronic tax books are planned to be introduced in the fiscal areas: this will make it easier for the State Revenue Service (SRS) to gain access to information about PIT benefits of workers of some companies. The plan also states the necessity of improving the EDS declaration system. These measures are called to improve the accounting process.

The ministry plans to improve life for companies that trade across borders. It is planned to allow such companies to submit electronic customs declarations. The real estate registration procedure is planned to be made simple by means of the electronic registration system in the Land Book.

Last year marked the creation of an opportunity for any Latvian resident to found a business on the portal. In order to make this service more in demand, the ministry plans to improve the functionality of the e-signature service. Particularly, it is planned to activate this feature for all holders of ID cards. Furthermore, the ministry recommends introducing a lowered duty for registering firms on the aforementioned Internet resource.

Innovations to be commended

Finally, one more improvement that accounts the tax base for innovative developments of private companies. A special parliamentary sub-commission discussed the adoption of tax motivation measures this week. Soon this bill will be submitted to the Cabinet of Ministers for approval.

In order to create a leading economy, the readiness of the private sector to invest money in R&D is vital. Companies of the private sector, on the other hand, require some motivation to risk their money. A recent survey of the Latvian Chamber of Commerce and Industry showed that many entrepreneurs are prepared to invest in R&D if there are some tax benefits from it.

Something is being done already: a package of amendments has been prepared. It provides for the write-off of expenses on R&D with an increasing coefficient of 3. This means that by investing 10 thousand LVL, a company is able to reduced the corporate tax base by 30 thousand LVL. It is likely that this will not be the only measure.


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