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Friday 18.08.2017 | Name days: Liene, Helēna, Elena, Ellena, Liena

Economic Diary of Latvia. Watch out – finks!

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week, the Enterprise Register and Justice Ministry launched a campaign titled ‘Businessman, sort out your papers!’ The goal of this campaign is to inform business people that it will become much easier to re-register company capital from lats to euro.

The two institutions have developed amendments to the Law on Commerce. The Cabinet of Minister promptly approved these amendments on March 31st. Changes particularly apply to LTDs that have only one owner. There are approximately 74.5 thousand of such companies in Latvia. They form 80% of all registered subjects that carry out commercial activity.

The problem the Enterprise Register and Justice Ministry are trying to solve may seem not serious at first. Regardless, it causes a lot of busywork. The thing is that capitals in lats were stated in round numbers, so authorities decided to preserve the same rule for euro. However, conversion from lats to euro presents fractional numbers.

It is necessary to come up with a way to handle decimals, because entrepreneurs do not know what to do: how far to round number in order to maintain proportions.

Watch out – finks!

It became known this week that the State Revenue Service often uses information provided by finks in its work.

As noted by the head of SRS Inara Petersone in her interview to Latvijas Radio, the organization often receives information regarding tax avoiders from residents – more than 5,000 reports had been received in 2014. People provide detailed reports and information provided in them greatly assists SRS.

SRS plans to publish information regarding taxes paid by Latvian companies every year. Taxes paid for employees of companies will be emphasized. According to SRS, an open database that contains information about most companies will allow authorities to quickly compile expenses of companies.

According to Petersone, Latvia is quickly headed to full openness. People want to know everything – income of officials, teachers and businessmen. Publication of information about taxes paid by companies will be used as another tool to help combat shadow economy, which still has a strong presence in Latvia.

Authorities in other countries also often employ finks to gather sensitive information. This especially applies to USA. In 2006, amendments were added to American tax legislation that greatly increased reward for tax informants: to 15-30% of money transferred to the state budget from unpaid tax. This served to tremendously increase activity of tax informants.

«Report your friend and you will become a millionaire,» – this was the approximate motto presented by Turkish Finance Ministry several years ago. If the reported information is confirmed later on, the informant receives 10% of the unpaid tax amount.

In France, tax inspectors actively use anonymous letters, information provided by neighbours and informants. Other countries are starting to take notice of the informant culture, including Latvia.

A meeting in the tops

Although this event does not hold any economic value, it is worth mentioning nonetheless, as the economic effect from it may come back in the near future. An informal meeting of the Council of Ministers of Baltic States took place in Vilnius this Friday, April 10th. Officials of Baltic States discussed matters of security, energy and transport together.

Officials also discussed preparations for the Eastern Partnership Summit, which is planned to be held in Riga May 21-22.

This is where it gets interesting. It is planned to discuss the matter of providing Ukraine a visa-free regime starting January 1st, 2016.

Ukraine launched a simplified visa regime wit Europe on July 1st, 2013. Now Kyiv is trying to establish a completely visa-free regime. Ukrainian authorities hope the decision regarding a visa-free regime will be made on the upcoming summit in Riga.

Informal meetings of heads of state are held once a year in one of the Baltic States. The last meeting was held in Tallinn in 2014. The prime ministers of Baltic States discussed Rail Baltica. As it can be concluded, such informal meetings more often than not lead to real action.


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