bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Wednesday 20.09.2017 | Name days: Marianna, Ginters, Guntra
LatviaLatvia

Economic Diary of Latvia. Finance Ministry vs. laundries

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

This week was rich with events. Particularly, it became known how the Finance Ministry will track companies and uncover schemes of, so to say, «tax optimization». Good news first though.

Of pros and cons of investor visas

The Internal Affairs Ministry has presented its annual report on the amount of money that was invested in Latvia in exchange for residence permits. During the period from July 1, 2011 to June 30, 2012 the volume of investments reached 154.08 million LVL – more than twice the amount of investments of last year. The most popular method of acquiring a residence permit is still through purchasing real estate. During this period, foreigners bought objects for a total amount of 126 million LVL, which is 162% more than last year. The second most popular method – investments in company capitals. Foreigners invested a total amount of 4.99 million LVL in 70 different companies, which is 152% more than last year. In total, since the becoming in force of the amendments to the Immigration law two years ago, foreigners brought Latvia 220.49 million LVL.

The reports of the ministry will be submitted to the Defence, Internal Affairs and Corruption Prevention Commission for review in the nearest future. The commission will then evaluate the influence of such investments on Latvia’s economy. Only two negative opinions are known about this. National parties believe these investments to be bad for our country. Economy Minister Daniels Pavluts, on the other hand, sees nothing negative. He notes that a number of Russian businessmen first buy real estate in Latvia, then relocate production here.

Port inspections

While one parliamentary commission is inspecting money flow, the other intends to, finally, clean up Latvian ports. The Saeima National Economy Commission attracted experts from the World Bank, who will inspect the activities of our ports this autumn. The author of this initiative, the head of the National Economy Commission Vyacheslav Dombrovskis believes this industry to be one of the least transparent in our country. According to him, inspection will last for three to six months. Specialists of the World Bank will conclude how effective the current management model is and what reforms are necessary to raise the competitiveness of Latvian transit. Results of the audit will then become the foundation of the reform for the port management system. According to initial calculations, services of the World Bank specialists will cost the State budget 10 thousand LVL.

It is unclear though, why our parliamentarians did not turn to the specialists of our own State Audit Office, who not only performed audits at ports on multiple occasions and prepared reports with detailed analysis of flaws and violations and how to fix them.

Doing business in Latvia

It also became known that Lithuania has all the chances to outrun Latvia in the global Doing Business rating, which is compiled every year by the World Bank and the International Finance Corporation, assessing business climate in 183 countries of the world. Latvia unexpectedly made a leap of ten positions in the last year’s rating: from 31st to 21st position. As a result, Estonia (24th) and Lithuania (27th) were left behind our fair country for the first time in many years. Latvia earned a high place in the rating thanks to a sufficient progress in such areas as business initiation, bankruptcy of companies and electric network connection. However, our neighbours have the chance of climbing higher than Latvia in the upcoming Doing Business 2013. Lithuanian Economy Ministry expects to climb ten positions – to the 17th spot. As the Verslo zinios newspaper writes, the county managed to achieve progress in seven out of ten main rating criteria. These criteria are: business initiation, issue of construction permits, real estate registration, acquiring credits, foreign trade and insolvency process.

Latvian Economy Ministry followed Doing Business when preparing improvements of the country’s business environment in 2012. It was expected that the realization of 30 measures that were included in the plan will allow the country to be included in the first twenty and preserve its conquered positions in a long-term perspective. However, only four out of 30 stated measures were completed by June 1, 2012. Economy Ministry explains the small progress of the plan’s realization with the fact that most measures are planned for the second half of the year. Meanwhile, the institution called all involved structures to perform active steps in realizing the planned measures, so that the planned goals are guaranteed to be reached by the end of the year.

Finance Ministry vs. «laundries»

In 2013, the Finance Ministry wants to increase control over companies to improve tax collection. Particularly, this applies to companies whose officials are registered at, for example, shelters (there were 729 companies on August 17, 2012), Riga, or some other unspecific location stated as place of residence. Having closed these «laundries» for VAT, the budget will receive an additional 5.5 million LVL and 6 million LVL each on 2014 and 2015. Furthermore, the Finance Ministry plans to tighten control on advance payments for economic activities, ones companies usually give their employees. People at the finance institution believe that, in most cases, employees receive salaries that are not subject to PIT and social tax. Ideally, a receiver of such advance payments should present receipts that would prove that those funds were used as intended. But most companies do not do this. The Finance Ministry believes this problem can be resolved by clarifying the rules regarding keeping accounting. These clarifications will state the period an advance payment receiver is obligated to present documents of the use of the received funds. The institution hopes to give the budget an additional million LVL per year by doing so.

It was planned to add a larger amount by obligating businessmen to report the profession of specialists they plan to employ and the person’s daily working hours. As a result, fiscals will be able to compare income of specialists of more or less the same profile at different companies and uncover envelope salaries. Nevertheless, most of the funds – 15 million LVL per year – the Finance Ministry hopes to receive using a natural way – economy growth.

Ref: 017.109.109.3480


Leave a reply

Judins says parliamentary committee «is going nowhere»

The work performed by Saeima’s investigative committee in charge of oligarch case does not fit the established goal to investigate and analyse possible state capture, says member of the committee and Unity’s Saeima faction Andrejs Judins.

Study: residents criticize development of Latvia general situation the most

With the coming of autumn, residents’ optimism has declined significantly, according to results of Baltic International Bank’s Latvian Barometer.

Number of occupied jobs in Latvia up 9.3 thousand

At the end of the first half of 2017, in Latvia there were 903.2 thousand occupied posts, and, compared to the end of the first half of 2016, the number has grown by 9.3 thousand or 1.0 %.

Latkovskis says sometimes questionable votes are lobbied in Saeima in secret

There have been cases sin which questionable votes were being lobbied in the parliament in secret. Compared with last year, this tendency is demonstrating growth, said Saeima deputy Ilmārs Latkovskis in an interview to Latvijas Avīze.

E-governance advocate Ilves comments on alleged Estonian ID card vulnerability

The ex-President of Estonia Toomas Hendrik Ilves, who has been an active advocate of e-governance has emphasised that a possible security risk with Estonian ID cards has not put that the country's reputation as an e-state at risk.

Delna invites Saeima to support initiative to liquidate option to abstain from votes

Society for openness Delna invites Saeima deputies to support public initiative and liquidate the option for deputies to abstain from votes.

82% of Estonian households use mobile internet at home

As to the choice of internet connection in Estonia, 82% of Estonian households use mobile internet at home, Estonian statisticians have estimated.

Baltic Express attracts railway cargoes; decline noted for other carriers

Railway cargo carrier Baltic Express more than doubled its cargo volumes in the first seven months of 2017. Meanwhile, other two cargo carriers – LDz Cargo and Baltic Transit Service – have suffered cargo declines. Baltic Association – Transport and Logistics notes that it is ringing the alarm over the situation in the industry, not over the interests of its members.

Survey: more than half of Latvian residents are half-serious about their health

44% of Latvian residents use all medicine prescribed by their doctor when they get sick, according to data from Mana Aptieka&Apotheka health index.

In pictures: Zapad drill in full swing

BNN offers you an insight into the quadrennial join military training of Belarus and Russia, which have been inspected in person by Russian President Vladimir Putin and Russian Defence Minister Sergey Shoygu.

Rinkēvičs invites India to open an embassy in Latvia

During the 72nd session of the UN General Assembly in New York on Monday, 18 September, Latvian Foreign Affairs Minister Edgars Rinkēvičs met with his Indian counterpart Sushma Swaraj. The two discussed political and economic cooperation between the two countries.

Norwegian top policeman sentenced to 21 years in prison for aiding hashish contraband

A court in Norway, a country often recognised as one of the least corrupt globally, has convicted a senior Norwegian police officer to 21 years in prison after finding him guilty of taking bribes and helping drugs contraband.

Road Transport Administration: transport planning in Riga does not reflect region’s scale

Road Transport Administration plans to speak with Riga and Pierīga administrations about the fractured public transport system in the region, says the administration’s chairman Kristiāns Godiņš.

Mass Ryanair cancellations expected

Irish airline Ryanair has warned that due to an internal planning problem up to 400 000 flights could be cancelled in the European Union.

Legislative draft proposed to simplify referendum procedure

The Central Election Commission has registered Open Management Partnership in Latvia signature collection association’s legislative draft submitted for the fourth time. This legislative draft proposes cancelling amendments of 8 November 2012 to the Law on National Referendum, Legislative Initiative and European Citizens’ Initiative, as reported by the commission.

Greece to lift wine tax due to low revenue

The government of Greece plans to submit draft amendments to lift the country’s year-old excise tax on wine, Greek Minister for Agricultural Development and Food has stated.

Reirs: pension budget will increase by EUR 160 million next year

Next year, pension budget will increase by more than EUR 160 million, says Latvian Welfare Minister Jānis Reirs. He explains that the total pension budget will be EUR 1.93 billion, which means funding for next year’s pensions will be 9.19% higher.

Oligarch case’s parliamentary committee settles disputes with shouting

During a meeting of Saeima’s committee entrusted with investigating Oligarch case, a loud argument broke out between Unity faction member Andrejs Judins and publicist Imants Liepiņš.

IDB: it is too soon to expect corruption to go down in traffic monitoring field

Society’s condemnation of bribery is positive, but it is currently too soon to expect the problem of bribery in road traffic monitoring field to go down, admits Internal Security Bureau chief Valters Mūrnieks.

Apinis: Latvia’s Healthcare Ministry is intellectually weak

Pēteris Apinis, head of Latvian Association of Doctors, criticizing the reform plan, saying: «Just like the Napoleon cake has no Napoleon, the reform plan has no reforms.» He believes Healthcare Ministry’s intellectual potential declined in the past three to four years and that the institution in its current state is intellectually weak.

airBaltic performed 14,324 flights in summer

In August 2017, Latvian airline airBaltic carried 386,597 passengers or 21% more than it did in the same period in 2016, as BNN was informed by the airline.

Sudraba: deputy quotas matter will be resolved in officials’ offices this year

The matter of the so-called deputy quotas will be resolved in officials’ offices this time, deputy Inguna Sudraba of To Latvia from the Heart told Latvijas Radio.

Estonia should invest in long-term productivity, environmental protection – evaluates OECD

As Estonia’s economic recovery gathers pace, it is time to work for sustainable development by protecting the environment and looking for ways to increase productivity, the Organisation for Economic Co-operation and Development has recommended.

Option to abstain from vote proposed to be liquidated to reduce possibility of hiding opinions

On Monday 18 September, a citizens’ initiative will be submitted to the Saeima to liquidate the option to abstain from votes in the parliament.

KNAB commences criminal process in state institution’s service

Corruption Prevention and Combating Bureau has commenced a criminal process for, possibly, illegal activities in a state institution service.