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Saturday 23.06.2018 | Name days: Līga

Economic Diary. Latvia Week 28 of 2012

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The holiday season does not contribute to the lively economic life of our country. Nevertheless, there were separate flares of business activity this week.

The President prefers energy independence

Even the President of Latvia Andris Berzins is concerned with the issue of energy independence. He invited elected Saeima deputies from Latgale that are part of the ruling coalition, to discuss the possibility of constructing two new HES on Daugava River. The people’s representatives could not give a definite answer, noting that this issue requires an in-depth investigation.

Last month, the head of the state presented an idea to add new sections to the cascade of Hydro Electric Dams on Daugava River. The development of national capacities in the production of electrical energy could become an alternative to the participation in the construction of the Visagina NPP in Lithuania. The reanimation of the Daugavpils HEP project that was cancelled due to protests from the «green» movements in the late 80s was noted as the most possible variant. However, now, the Saeima deputies do not deny the old idea as categorically as they did in the past, saying that this issue should be discussed in detail by specialists.

Latvenergo specialists, on the other hand, are skeptical about this idea. Member of the Board of the energy monopolist Maris Kunickis claims that the reanimation of the Soviet project is impossible. Back then, it was planned to construct a 200 MW hydropower plant, but this would cause the flooding of large territories of land not just in Latvia but in Belarus as well. If the area of the water reservoir is limited to only Latvia, the power output of the station would reduce to 100 MW, which will immediately make it hardly cost worthy. What about the Jekabpils HEP? Power output can only reach 30MW, which will not make an impact on the country’s energy independence.

Who are they – the most honest ones?

While the head of the state is busy with global problems, the State Revenue Service (SRS) begins compiling the so called «white list» – a register of the most honest people in the relationships with the state company. At least two companies have already handed in applications to be admitted to this list, but the state service is not planning on revealing their names yet. If these candidates are deemed worthy to be included on the «white list», information regarding them will be published on the website of the Finance Ministry; if not, it will remain a secret.

The wait for the publishing of the names of the courageous ones will not take long. According to the rules, the SRS is obligated to evaluate a candidate within ten days and then report to the Finance Ministry. With a full compliance with the required criteria, the ministry will allow a company’s inclusion on the «white list»; while with a clear discrepancy will only result in a decline. Insignificant irregularities in specific points will forward the candidate to a special commission (it includes officials and representatives of business organizations). If a situation reaches this institute, ten more days will pass before the commission will give its recommendation – whether the candidate is fit or not.

At first, «white list» members will have only modest bonuses – all from the SRS. The service will allocate special consultants for them (even though only big companies that are already well within the sight of the Office of large taxpayers will be able to join the rotation during the first year) who will warn them about the risks of not paying taxes; swiftly return VAT and respond to inquiries faster. In time, the list of benefits could include additional bonuses: the ministries are ordered to evaluate their own readiness to support honest businessmen. After the end the year, the range of candidates is also expected to increase.

Tax e-Book

The abolishing of traditional tax books: another initiative of the SRS – to replace traditional tax books with electronic versions. Right now, the SRS is preparing a full report for the Cabinet of Ministers on this topic, so the current information on this topic is rather scarce. Nevertheless, it is already known that the main connection channel will be the Electronic Declaration System (EDS). It is expected that individuals will use it on equal terms with businessmen to look up the volume of discounts on PIT and its source (if the person is employed on more than one job). Those, who will remain on the outside of the system, will be able to look up this kind of information using

Foreigners are buying up Jurmala

Finally, one more fact worth mentioning – Jurmala is once again going through a rather massive construction of residential homes. At least, statistics state that Jurmala’s real-estate segment is going up. According to Jurmala City Council, 169 – 193 construction permits were handed out in 2006-2008, these permits mostly accounted for residential houses. In 2009, this market predictably collapsed, and only 79 such permits were handed out that year. The situation gradually improved – there were 106 permits handed out in 2011.

According to market players, there are currently 15-20 multi apartment residential houses that are already issued for exploitation or are expected to be finished in the nearest time. As a result – there are around 300 apartments available in new projects in different stages of readiness. Fifty six buildings are considered to be elite housing by specialists. The rest is business class.

The explosion was caused by the lack of sufficient supply in Jurmala, i.e., no new projects were being constructed in 2008-2010. Furthermore, demand of real-estate was also affected by the opportunity of receiving investor residence permits, so new players decided to develop projects.

Foreign investors became the mechanism for launching the current real estate activity. As the head of the Jurmala department of Latio Edgars Spuravs says, foreigners are buying up around three quarters of housing in new projects. Some experts mention far more radical numbers. So, according to Marketing Manager of Ober Haus Evita Zembega-Zakalovska, foreigners are buying around 95% of housing in new projects. And all this is despite the fact that prices increased by 20-50% in the last two to three years. According to realtors, the price of one m2 varies right now from 2 500 to 5 000 EUR, depending on location: the closer to the sea and the Center of Jurmala – the more expensive it gets.


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SRS uncovers numerous violations more than half of inspected companies

State Revenue Service’s Tax Control Office performed a total of 305 thematic inspections of employers in Latvia in Q1 2018. Authorities recorded violations in 171 inspections, according to information from SRS.

Third level pension plan deposit volumes reach new record value

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Petrol station network in Latvia caught performing fraudulent activities with diesel fuel

State Revenue Service’s Tax and Customs Police have uncovered and put an end to a fraudulent scheme with diesel fuel performed by some network of petrol stations in Latvia, as confirmed by the service.

Kaimiņš: I believe CPCB is performing a political order

In the evening of Thursday, 21 June, Corruption Prevention and Combating Bureau released three people previously detained as part of a criminal process regarding possible illegal funding of KPV LV party – Saeima deputy Artuss Kaimiņš, his colleague Atis Zakatistovs, and businessman Viesturs Tamužs.

Latvia’s parliament conceptually supports new sanction regulations

On Thursday, 21 June, Saeima supported in the final reading amendments to the Law on International Sanctions and National Sanctions of the Republic of Latvia that are meant to improve sanction regime regulations to ensure efficient application of national and international sanctions, as reported by Saeima press-service.

Storm in Tallinn floods streets, cuts Croatia-Argentina match short on TV

A rain storm has hit northern Estonia on Thursday, flooding some streets in the capital Tallinn, damaged buildings and badly affected the broadcast of an interesting World Cup game.

American banks tested for financial stress show positive results

The U.S. has performed banking stress tests and found that the 35 largest banks operating in the country have enough funds on hand to sail safely through a severe financial crisis.

Saeima fires judge for coming to work in a drunken state

On Thursday, 21 June, Latvia’s parliament supported the proposal to dismiss Rezekne Court judge Arvis Garais from his post. 71 deputies voted in favour, no one abstained and no one voted against.

UK to have three requirements to EU citizens willing to remain in UK

For citizens of the European Union willing to continue living in the UK after the country leaves the bloc, they will have to submit applications and answer three key questions over the internet, according to the country's interior minister.

Weather in Latvia to be rainy and cool during Ligo; next week’s weather to be dry and hot

Weather at the end of the week in Latvia will be dictated by a cyclone. Because of that, there will be instances of rain on Ligo. Weather is expected to improve next week, however, according to Latvia’s State Environment, Geology and Meteorology Centre.

Lithuania’s blood plasma corruption scandal extends to Latvia

The former head of Lithuania‘s National Blood Centre, suspected of corruption and involvement in unlicenced activity, received more bad news this week from Latvia, where investigators of the Lithuanian Special Investigation Service had questioned the Latvian Health minister, Anda Čakša.

Administrative burden to be reduced for foreign students and researchers

The administrative burden will be reduced for foreign students and researchers, as well as all education and research institutions hosting them. This is provided by the amendments to the Immigration Law approved by the Saeima in the third reading on Thursday, 21 June.

Latvian Economy Minister endures no-confidence vote

Saeima declined opposition deputies’ request for dismissal of Economy Minister Arvils Ašeradens.

Swedbank economist becomes new member of Bank of Latvia Council

On Thursday, 21 June, Latvia’s Saeima approved Mārtiņš Kazāks in his new post as member of Bank of Latvia Council, as confirmed by Saeima’s press-service.

Pope Francis’ visit to Latvia will be a national holiday

Latvia’s parliament has approved in the final reading a law that makes 24 September – the day Pope Francis plans to visit Latvia – a national holiday.

ICT specialist numbers in Latvia are below Europe’s average level

In Latvia, information and communication technology specialists form only 2.2% of all employed people in the country, which is considerably below the average level in the European Union – 3.7%. Romania and Greece are the only two EU member states in which the number of ICT specialists is below Latvia’s, according to European Commission’s DESI index.

Hungary adopts prison sentence for helping migrants

Hungarian National Assembly has passed a set of laws criminalising with prison terms some help provided to illegal immigrants by non-governmental organisations.

Harmony plans turning to Constitutional Court to prevent transition to Latvian language in schools

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Deputies detained in KPV LV criminal case not declared suspects yet

Saeima deputy Artuss Kaimiņš and businessman Viesturs Tamužs detained in the criminal process regarding possibly illegal funding of KPV LV party have not yet been declared suspects. Both are currently in police custody. It is likely Kaimiņš will be released later today, 21 June.

Production of mines and grenades planned in Estonia

As the Estonian parliament has adopted new rules on military arms and ammunition production in the country, local defence firm Eesti Arsenal has voiced its plan to build a factory in Estonia to make military explosives.

Total tax debts in Latvia reached EUR 1.224 billion in June

At the beginning of June, total tax debts in Latvia, including topical, halted debts and extended repayment terms were equal to EUR 1.233 billion, which is 0.6% less compared to May, as reported by State Revenue Service.

Switch off internet nationwide during exams – Algerian approach

In an attempt to prevent cheating during secondary school exams, the north African nation Algeria, has turned off internet in its whole territory.

Control Service proposes kicking out shell companies as intensely as offshore companies

Shell companies in Latvia should be combated with the same intensity once shown to offshore companies, says chief of Anti-Money Laundering Service Ilze Znotiņa.

EU imposes tariffs on blue jeans, motorcycles and other U.S. export goods

The European Union will introduce retaliatory tariffs against U.S. exports on Friday, EU Trade Commissioner has stated a top official has stated in the bloc's reaction to Washington imposing steep duties on steel and aluminium earlier in June.

Latvia’s Saeima proposes improving job-combining rules for state officials

On Wednesday, 20 June, Latvian parliament’s Public Administration and Local Government Committee decided to submit for review amendments to the Law on Prevention of Conflict of Interest in Activities of Public Officials.

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