Latviski English По-русски
Wednesday 23.08.2017 | Name days: Valgudis, Ralfs, Vitālijs

Economic Diary. Tenants to be forced to pay taxes

(No Ratings Yet)

The dramatic events currently transpiring on Cyprus were, without a doubt, the main intrigue of this week. Even though Cyprus is a long way from Latvia, our fair country felt the aftershock nonetheless.

ECB sends a signal

Recently, many people were saddened by the news that the European Central Bank (ECB) has sent a signal to the Latvian government. The point of the signal was simple: dear friends, do not accept Russian money coming from Cyprus. Initially, the information about pressure being used against Latvia in regard to the problems of the Mediterranean state was distributed by Reuters with reference to an unspecified head of one of the central banks in the Eurozone. According to the resource, Latvian authorities were told not to provide ”asylum” for Russian money if Latvia aims to join the Eurozone. Prime Minister Valdis Dombrovskis and Finance Minister Andris Vilks announced they they did not, in fact, receive such a warning from ECB.

“Statistics clearly show that our country is not the main destination of the money coming from Cyprus. An approximate amount of 1.7 billion EUR was transported out of Cyprus in January. The total volume of non-residents’ deposits in Latvian banks from all countries increased by almost 130 million EUR for the same period. With that, there is no reason to believe the current tendency could change, and a large volume of funds would flood Latvia,” – Finance and Capital Market Commission press-secretary Laima Auza reports.

According to her, Latvia should not be put on the same level as Britain, Luxembourg and Switzerland in terms of being a financial centre. Furthermore, our country has a rather strict regulation of the banking sector. “We do not predict any significant changes in the flow of non-residents’ deposits with the situation in Cyprus,” – the Prime Minister concluded.

Tenants to be “whitened”

While the PM and other responsible ministers were busy with the whole Cyprus money ordeal, the Economy Ministry decided to start regulating tenancy – the only segment of the real estate market that has been demonstrating stable growth rates during the last several years.

This new bill will need to create a new legal base for relationships between tenants and landlords. For example – it is planned to create a special rent contract registry, which will include information about all contracts, sizes of rented areas, numbers of tenants, terms, etc. This is the government’s plan to eradicate the back rental market and force apartment owners to pay taxes.

The new law is also called to relieve the owner of the rented premises from the necessity to offer tenant a different apartment.

There has been a stable increase of the prices noted in the rental market over the last several years. According to the outlook of Nira Fonds, the rates are expected to rise by 5% this year.

More adverts everywhere

One other market that has recently managed to demonstrate growth was the advertisement market. The total volume of the advertisement market of Baltic States reached 242.7 million EUR last year. This volume is 1.2% larger than it was in 2011, according to the data from TNS Latvia.

Latvia became the leader in the percentage of the increase of advertisements in the country’s mass media sector. Its market increased by 3% and reached 70.9 million EUR. Neighbouring countries, however, increased their money equivalent: Lithuania’s industry reached 99.4 million EUR (+07%), that of Estonia – 72.5 million EUR (+0.3%).

Data from TNS also note the increase of annual investments in the advertisement market per capita. Latvia’s and Lithuania’s indexes show 34.7 EUR and 33 EUR respectively. Estonia holds the bar in this regard – 54.1 EUR per capita.

According tot he manager of TNS marketing registry Oskars Rumpeters, retail trade was the most highly advertised industry in Latvia (Maxima, Rimi and Linstow), followed by the mobile network communication industry (LMT and Tele2), and pharmaceuticals (Noveartis, Sandoz and Berlin-Chemie/Menarini).

Four in one

Now then – banks. Following the Easter holiday, the Latvian government will have to decide the judicial form of the future Institute for Financial Development. The concept provides for uniting four organizations under IFD. Each of them currently supports business in their own way: Mortgage Bank issues credits to micro-, small- and medium-size companies; the Latvian Agency for Guarantees helps develop venture capital funds and provides guarantees; the Agricultural Development Fund helps rural entrepreneurs; the Investment Fund concentrates on ecological projects.

The Economy and Finance ministries are unable to agree as to who will manage this organization. FM is responsible for the Mortgage Bank, LAG. On top of that, it seems as though none of these organizations are prepared to share their authority with colleagues.


Leave a reply

Sudraba claims KNAB investigated oligarch case to the maximum extent

Investigators of the so-called oligarch case, which continue working at the Corruption Prevention and Combating Bureau, performed their work responsibly. Information leak during the investigation, on the other hand, had impacted the investigation considerably, said head of the parliamentary investigation committee Inguna Sudraba as a visit to KNAB.

Survey: 43% of internet store users purchase something once a month

Overall, Latvian consumers are satisfied with the purchases they made on internet stores. 65.3% of respondents believe internet stores are safe and reliable. 44.7% of respondents say they have never had any problems when shopping on the internet, according to results of a survey performed by

Government establishes prohibition to wear face-concealing clothes in public

On Tuesday, 22 August, Latvian government supported Justice Ministry’s proposed legislative draft on restrictions for face-concealing clothes, which prohibits residents from wearing such clothes in public places.

Experts explain why a teenager’s «I don’t know» is so dangerous

Most often we say things like «I don’t know» because we are afraid of making choices. Reaching their teens, youngsters become more independent, and the inability to make responsible decisions and say «no» can have serious consequences, says psychologist Sabine Vilcina and youth motivation programme «MOT. Izvēlies drosmi!» manager Ilze Paidere-Stake.

Traders: following VAT decline, prices of goods will decline as well

Latvian Association of Food Traders supports Agriculture Ministry’s proposal to reduce VAT rate for food and separate food product groups. Traders confirm that this step will also reduce food product prices in stores.

The most major risks and solutions for real estate purchase and rent with option to buy

To acquire housing in one’s property, often residents use rent with an option to buy. Sworn attorney Zanda Zaluma of Eversheds Sutherland Bitāns shares advice resident should keep in mind when signing real estate contracts.

Finance Minister: businessmen will be forced to pay larger wages

The current market situation shows that Latvia should speed up its education reform and think about attracting additional human resources from other countries, said Latvian Finance Minister Dana Reizniece-Ozola in an interview to Latvijas Radio.

Latvia to procure Stinger anti-air missile launchers

A mutual contract has been signed between Latvian Defence Ministry and Danish Defence Ministry for the procurement of anti-air missile launchers used by the Danish armed forces, as confirmed by Latvian Defence Ministry.

Oil prices and stock exchange indexes decline in Europe

On Monday, 21 August, oil prices declined. Exchange indexes in USA increased slightly, whereas exchange indexes in Europe declined because of concerns over the policy implemented by the administration of US President Donald Trump.

Terrorists in Barcelona were planning three explosions

Terrorists, who performed two attacks in Catalonia last week, were initially planning to blow up three shuttle buses in crowded areas in Barcelona, as reported by El Espano.

Lawyer: Maxima wants to earn by reducing compensations for the tragedy

Maxima Latvija and Zolitude 21.11 have reached an agreement on payment of EUR 900,000 to support victims of Zolitude tragedy – EUR 5,000 to EUR 75,000 to each person, as reported by Maxima Latvija.

Producer prices in industry in Latvia grew 0.4% in July

Compared to June, the level of producer prices in Latvian industry rose by 0.4 % in July 2017. The prices of products sold on the domestic market increased by 0.5 %, whereas the prices of exported products grew by 0.3 %.

Enefit: Latvia reduces electricity price difference with neighbouring countries

In recent years, Latvia has managed to reduce the electricity price difference with other Baltic neighbouring countries, as reported by Enefit Chairman Janis Bethers.

Farmers Saeima: butter price will not remain high for long

The high price on butter in Latvia will not remain so high for long, said Farmers Saeima Vice-Chairperson Maira Dzelzkaleja-Burmistre in an interview to 900 seconds programme of LNT.

Aseradens elected as chairman of Unity; Krisjanis Karins to lead party’s city council faction

Unity elected Economy Minister Arvils Aseradens as the new chairman of the party. MEP Krisjanis Karins has been elected as the party’s leader in Riga City Council with Santa Zarane as his deputy.

LPS manager: forming the budget, it is important for municipal funding to stay the same

In the formation process of the next year’s state budget, it is necessary to guarantee finances do not reduce for municipalities, said the chairman of Latvian Association of Local and Regional Governments Gints Kaminskis in an interview to Latvijas Radio.

Police to organize inspections in stores; parents asked to watch their children as well

For the new school year, Riga Municipal Police will be performing regular inspections at stores, bars and cafes from 21 August to 31 August, as well as the first days of September, to make sure minors are not sold alcohol and tobacco products, BNN was told by police.

Colder masses of air to enter Latvia this week; more rain expected

This week’s weather in Latvia will be dictated by a cyclone hovering above Northern Europe. Colder masses of air will flow into the country. A lot of rain is expected in Latvia this week, as reported by State Environment, Geology and Meteorology Centre.

Kirsis asks police to assess possible forging of votes at Riga City Council

Riga City Council’s Unity faction chairman Vilnis Kirsis has asked State Police to check if the city council’s electronic voting system was used without another deputy’s knowledge or consent, said the politician.

Expert: attack in Spain shows how terrorists switched to more easily reachable targets

Terrorist attacks that transpired in Spain this week shows how terrorists have switched to more easily reachable targets, where security requirements are not as strict, says Latvian National Defence Academy’s Security and Strategic Research Centre researcher Martins Hirss.

New mandatory tests in schools to be introduced four years from now

In four years’ time – 2021/2022 school year – it is planned to introduce completely new mandatory tests in schools, as reported by State Education Content Centre Director Guntars Catlaks.

Nearly 9,000 children and their parents got homes thanks to state support programme

In the first half-year of 2017, state support helped 1,527 families in Latvia to buy homes. Compared with last year, families’ demand for state support has grown 6%, as reported by Altum finance institute.

Prediction: Aseradens will likely take control over Unity

Economy Minister Arvils Aseradens will become the head of Unity, Betsafe bookmakers predict. The possibility of Aseradens becoming the head of the party is given 45% probability by Betsafe.

Provisional estimate for next year’s fiscal space in Latvia is EUR 60 million

Next year’s fiscal space has been estimated at EUR 60 million, as noted by Finance Minister Dana Reizniece-Ozola, adding that a more precise estimate will be available at the end of August.

Reconstruction of Vilnius airport runway concludes; aircraft return to Vilnius

On Thursday, 17 August, Vilnius airport’s runway was festively opened. This was the most massive reconstruction for the airport in the past 20 years. It was a unique project for Lithuania and all of Europe, airport representatives say.

Newest comments