bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Friday 20.10.2017 | Name days: Leonīda, Leonīds
LatviaLatvia

Economic diary. Taxes as though a valve – turn it one way…

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis summer, Latvia is expected to turn on the programme to support young families that wish to buy their first homes. Partners of the ruling coalition had reached an agreement on this topic earlier this week.

‘Economy Ministry has been tasked with developing Cabinet requirements for this matter, so that they can be approved by the government by July 1st,’ – said Prime Minister Laimdota Straujuma after the meeting.

It was initially planned to finance this programme at the expense of residence permits. However, the work on amendments to the Immigration Law is taking too long, and so it was decided to find funding elsewhere. As BNN had previously reported, the Finance Ministry (which had been sceptical about this programme) had suddenly found an available amount of EUR 2 million on the account of a recently founded development institution ‘Altum’.

According to estimates of Latvian Association of Commercial Banks, 14% (100,000) of Latvian households want to improve their living conditions in the next couple of years. Only 3% can afford to make the first instalment. It is planned that state guarantees will be made available to approximately 1,000 young families.

Truth be told, experts had previously stated that the effect from this programme may prove to be insignificant due to the lack of funding. A single family can expect to receive a guarantee worth EUR 2,000, which can cover the first instalment (10-20%) only for loans up to EUR 10,000-20,000. This amount of money can only afford a one-bedroom apartment in Riga. It is possible to live outside the capital.

Taxes are as though a valve

Continuing the housing topic, it is worth mentioning the proposal to amend the Real Estate Tax in order to allow the registering of rent contracts not just in the Land Book, but also in municipalities.

January 1st, 2014, marked the coming into force of amendments that obligate owners of apartment buildings to register rent contracts in the Land Book within one month’s time. This requirement also applies to individual apartment owners. However, this ‘formal’ real estate property is taxed (0.2 – 0.6%). Other types of real estate are to be taxed with a penalty of 1.5%. This measure is aimed at black real estate market, where all calculations are performed with cash, no rent contracts are signed, no owners and tenants are registered and no money is paid to the treasury.

But instead of adding changes to the Land Book, owners decided to pay increased tax by laying it on the shoulders of tenants. They are the ones who rebelled against having to pay increased tax for owners at 1.5% of cadastral value.

Because this tax is administered by local authorities, it was decided to amend the Real Estate Tax Law with a permit to register rent contracts in the Land Book or municipal governments. If the bill is approved by all parties of the ruling coalition, municipalities will be able to make it to the first half-year of 2014 to perform recalculations.

In line with others

If taxes are to be taken with utmost seriousness, Latvia is due to join the convention of OECD on the exchange of information about taxes. An appropriate decision was approved by the Saeima’s Foreign Affairs Committee this week.

Latvia’s admission into this mechanism will allow the country to receive the latest information from EU member states. It is planned that this step will reduce the possibility of tax avoidance. When the law on the ratification of the convention comes into force, Latvia will be obligated to provide the same information to all other member states. Finance Ministry will be responsible for coordinating information exchange from Latvia’s side.

As BNN had previously reported, last year, Latvia received an invitation to begin talks in regard to the joining of OECD. There will be a series of technical missions aimed at collecting additional information in the near future. It is expected that Latvia will join the club of the wealthiest countries of the world in 2015.

Just in case

In light of such a perspective, it is necessary to think strategically. This includes planning in a long-term perspective. The Budget and Finance Committee had approved a new redaction of the Law on Long-Term Stabilisation Reserve this week.

It is 2014, and the time has come to renew regulations. And even though it is likely the Stabilisation Fund will not have any income in the next three years due to the planed budget deficit, it is still necessary to approve amendments.

However, according to experts, authorities should have formed reserves over the course of rapid economic growth of 2004-2007. At the time, on the other hand, it was impossible to do, because rapid economic growth was accompanied by rapid increase of expenses.

Reserve funds similar to the one that is being created in Latvia already exist in other countries. Estonia had created its own reserve fund in 2007: reserves helped this country overcome the economic crisis.

Ref: 017.109.109.2883


Leave a reply

Prime Minister: Latvia cannot accept additional asylum seekers

Latvia cannot afford to resettle additional asylum seekers, said Prime Minister Māris Kučinskis during his meeting with European Commission President Jean-Claude Juncker on Thursday, 19 October.

Scandinavians purchase tourism company in Lithuania; changes expected in Latvia too

Dutch Otravo online travel organization has expanded and has purchased Lithuanian online travel agency Interno Partneris, thereby entering the Baltic market.

Ombudsman: non-citizen status matter should be resolved in next decade

The next ten years may be the transition period to ‘put an end’ to the non-citizen status in Latvia, said ombudsman Juris Jansons in an interview to LTV programme Rīta panorama.

Swedish Foreign Minister: harassment exists at highest political level

The Foreign Affairs Minister of Sweden, Margot Wallström, has commended the current sexual assault and harassment awareness campaign in social media and urged to fellow politicians to address the problem.

Latvenergo recognized as Latvia’s most valuable company for tenth time

Latvenergo has been recognized as Latvia’s most valuable company in 2017. Its value grew 34% in comparison with 2016, according to the TOP 101 list of Latvia’s most valuable companies compiled by Prudentia and Nasdaq Riga.

Number of births and number of deaths decline in Latvia

During the first nine months of this year 15,723 babies were born in Latvia, which is 1,113 children fewer than in the corresponding period of the last year.

CC applies binding conditions for the sale of MTG Broadcasting AB

Latvian Competition Council has decided to permit Bite Lietuva to purchase MTG Broadcasting AB group’s businesses in Latvia. CC has applied several binding conditions to prevent a possible impact on competition on the television services and advertisement market.

Eesti Energia warns: Limiting CO2 emissions on capacity could endanger energy supply

Estonian energy giant Eesti Energia has evaluated that a plan under discussion in the European Union to introduce a carbon dioxide release limit for capacity mechanisms to qualify for subsidies could adversely affect the security of supply in Estonia and the Baltic states.

Solidarity tax norm recognized as non-compliant with Latvia’s Constitution

On Thursday, 19 October, the Constitutional Court of the Republic of Latvia declared the Solidarity tax norm as non-compliant with the country’s Constitution.

Survey: Riga residents go to the doctor’s the most often

34% of residents undergo regular health checks, according to Mana Aptieka & Apotheka health index. In addition, women are twice as serious about health checks as men.

LG cozies up with idea of rebuilding railway tracks to Reņģe, Latvia

Lithuania‘s Lietuvos Geležinkeliai has sent a mixed message as to what it intends to do next following an EC fine of nearly 28 million against it over the dismantling a 19-km railway stretch with the Latvian village of Rengė.

Čigāne: European Union’s social pillar is very important to Latvia

On Wednesday, 18 October, Saeima’s European Affairs Committee approved Latvia’s national position on the introduction of EU Pillar of Social Rights.

40% of all car problems are relate to lighting, battery and security systems

It has been determined that 41% of all car problems are related to lighting devices, 39% of problems are related to malfunctioning batteries, and 44% of problems are related to security systems.

Xi Jinping: Chinese socialism has entered new era

China's ruling Communist Party's five-year congress has been opened with the country's President Xi Jinping outlining a general plan for the future development of China.

Public transport in Latvia procurement may be at risk

Considering that continued and unhindered provision of public transport services on ten routes may become at risk from 1 January 2018 onward, Public Transport Council made a decision to ask the Road Directorate to sign a new contract to ensure services are available in multiple Latvian cities, as confirmed by Road Directorate.

Iraqi forces retake disputed territories from Kurdish forces

Three weeks after the Iraqi Kurdistan independence referendum, forces of the Iraqi central government have taken control of the territories in the country, which had been seized by Kurdish fighters after victories over the terrorist group «Islamic State».

Sale of MTG’s business in Baltics to Providence concludes successfully

Wednesday, 18 October, marked the successful conclusion of the sale of Baltic assets owned by Swedish media concern Modern Times Group to Providence Equity Partners. From now on companies previously owned by MTG in Baltics will function as a single organization named All Media Baltics, as confirmed by the company’s manager Pierre Danon.

Estonian port company makes 29% more revenue in January-September

Estonian state port company Port of Tallinn has made the revenue in the amount of 99.1 million euros in the first nine months of 2017, which is a 29% increase compared to January-September in 2016.

42 gambling halls to be closed down in Riga in next five years

On Wednesday, 18 October, Riga City Council supported plans to close another 33 gambling halls in the city. With that, a total of 42 gambling halls will be liquidated in the next five year.

Latvia has the highest index of female CEOs among EU member states

The highest index of female CEOs among European Union member states belongs to Latvia – 47%. In total, only 33% of CEOs in EU were female last year, according to data from the Central Statistical Bureau of Latvia.

Survey: more and more people take notice of benefits provided by EU membership

65% of Latvian residents believe the country’s membership in the European Union has brought tangible benefits. A similar opinion was voiced by 64% of residents of all EU member states in the Eurobarometer study performed by the European Parliament.

17 persons in need of international aid are relocated to Latvia from Turkey

On Tuesday, 17 October, seventeen individuals, including nine children, in need of international protection were relocated to Latvia from Turkey as part of EU resettlement programme, as confirmed by Latvian Office of Citizenship and Migration Affairs.

BATL: to avoid crisis in transit sector, government and Transport Ministry must act

Latvian Prime Minister Māris Kučinskis’ led Latvian Ports, Transit and Logistics Council also supports Saeima’s National Economy Committee’s decision on the need for Transport Ministry to develop a long-term vision for the development of the country’s transit industry.

Psychologist: six-year-old children are not ready for school

«It is wrong to believe that the sooner a child starts going to school, the better their academic results will be. Reforms are performed aggressively, without asking pedagogues or other specialists for their opinion. We lack a comprehensive analysis of the current situation that would be based on studies, not international ratings,» says certified clinical psychologist and psychotherapist Jolanta Lamstere.

Klaipeda transport ticketing system to be installed by Estonian Ridango

In the Lithuanian port city of Klaipeda, Estonian firm Ridango has been selected for installing its technology on public transport.