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Monday 19.02.2018 | Name days: Zane, Zuzanna

Economic Diary of Latvia. Repay your debts with your private property

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, the Latvian Saeima finally approved amendments to the Taxes and Duties Law. In accordance with these amendments, management boards of commercial enterprises will have to cover their companies’ unpaid tax debts with their private property.

Latvian State Revenue Service is now authorized to launch tax debt collection procedures if cases fall under the following categories:

-the amount of the debt is equal to 50 minimum wages (EUR 16,00 at the moment and EUR 18,000 in 2015);

-the taxpayer has been informed of the decision to launch a tax recovery process;

-it has been uncovered that the taxpayer had alienated assets of the company in favour of some third party after a tax debt had accumulated;

-the taxpayer who performs economic activities has not fulfilled requirements stated in the Insolvency Law and has not submitted an application requesting insolvency.

SRS will not charge tax debts from management board members if they can prove there had been objective reasons for not declaring insolvency.

Commercial entrepreneurs are seriously concerned about this new form of regulation.

«Politicians have approved the regulations without listening to the Justice Ministry and Saeima Legal Affairs Office, who had openly stated that this regulation goes against the definition of Limited Liability Company and, possibly, the Constitution of the Republic of Latvia,» – says the Chairman of Latvian Chamber for Commerce and Industry Janis Endzins.

He has turned to President Andris Berzins with a request to veto these amendments. In support of his protest, entrepreneurs voice the following reasons:

-this norm breaches Section 91 and Section 105 of the Constitution of the Republic of Latvia and possibly several other sections (Saeima Legal Affairs Office had previously noted this as well);

-this norm will have a negative impact on Latvia’s business environment and the development of the country’s national economy, which will only decrease state budget revenue and increase the number of cases of raiderism;

-this mechanism can be easily avoided (by appointing third parties as management board members). This would force SRS to waste resources trying to collect debts from formal management board members, not the actual beneficiaries;

-this norm will have a negative impact on people’s desire to start a business and take charge over a company;

-the reason why this mechanism is being created is to avoid using the established mechanisms by simply increasing the authority of monitoring authorities;

-there are many things that have been left out, including significant legal risks once mentioned by the Saeima Legal Affairs Office and Justice Ministry.

Up for some financial stability

Residents who are in poor physical condition find it difficult to find motivation to make savings, as stated by results of Nordea Money School’s survey.

In general, 41% of the population admits they feel safe in terms of finances and certain about the state of their private budget.

It is interesting because residents who are physically active are far more confident about their finances than other residents.

Residents who are in poor shape more often mentioned problems with their financial state – 25% of these residents consider their financial state to be lacking and one-third believe their financial state is bad.

Buyers lie in wait, real estate becomes cheaper

Prices continued to decline for apartment prices in Riga this November. At the same time, price decline has been noted in nearly all micro-districts in Riga, as noted by Arco Real Estate Board member Maris Laukaleis.

Compared to October 2013, prices have reduced 0.2% in November 2014.

With that, the average price on apartments reduced to EUR 638 per 1 m2 in November. The average price level was 60.6% lower than that of July 1st, 2007, when the average price of an apartment reached its historically highest mark of EUR 1,620 1 m2.

«The waiting strategy of potential buyers, which is the cause of the decline of prices, is explained with uncertainty in regard to the introduction of the settled-down keys principle and the tension in Ukraine. It is clear that the general trends on the market are dictated by the recently adopted amendments to the Immigration Law, which has already reduced the number of deals in the apartments segment in Riga,» – explains Laukaleis.

The highest prices for apartments noted in November 2014 were registered in Teika, where the average price per 1 m2 reduced to EUR 799 in November. The lowest prices were noted in Bolderaja – EUR 458 per 1 m2.

Everything is great in our kingdom

According to the Latvian Automobile Association, a total of 13,690 new cars have been registered in Latvia in the past eleven months of 2014, which is 16% more than there were registered in the same period of 2013.

The most popular car this year in Latvia is Skoda Yeti – 492 newly-registered cars in the past eleven months. Skoda Octavia is also one of the most popular cars in Latvia this year – seventh place and 281 registrations.

The second place in terms of popularity is help by the Japanese Nissan Quashqai (496), followed by Volkswagen Golf (438).

The TOP 10 ends with Toyota RAV4 (403), Toyota Auris (243) and Peugeout 3008 (320).


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