bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 27.02.2017 | Name days: Līva, Līvija, Andra
LatviaLatvia

Foreign investors: grey economy ruins Latvia’s reputation

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU«Grey economy ruins Latvia’s reputation in the international business environment,» – foreign investors say, adding that the main causes behind grey economy include weak control and incomplete application of legal measures, corruption and political games, insufficient motivation to pay taxes, high income tax and social inequality and comparatively low tax-paying culture in the country.

«In Latvia companies often think: if you know how to cheat and have opportunities to do that, there is no reason not to. This is largely because the country cannot properly protect itself. And this is because there is no certainty that paid taxes will be rationally used. At the same time, it serves as a form of protest: the general understanding of the reason to pay taxes is very low,» – as mentioned in the report presented by the Foreign Investors Council in Latvia on Thursday, 26 May.

«Grey economy creates unfair competition between those who pay taxes and those who do not. All this creates a snowball effect – taxes are not administered in full amount, which results in decisions to raise them and again impact the companies that honestly pay taxes, worsening the competition in the process. Companies that pay taxes may last for a little while, but it is only a matter of time until taxes become unbearable,» – investors say.

Foreign companies offer proposals to help combat grey economy in Latvia, including the improvement of the transparency and predictability of the country’s tax system, tax collection system, investment into proper training of employees, increase of fines for involvement in grey economy, reduction of the labour force tax burden, simplification of the tax system for small and micro enterprises, use of electronic documents in communication and make efforts to reduce the abundance of transactions involving cash.

At the same time, businessmen note that «it is important to consider not only fines and punishments, but also ways to motivate people and companies to be honest and create inconveniences for those who operate in the grey economy. Unless there is no appropriate reaction to illegal activities, it is impossible to change anything».

In general, it is concluded in the report that in order to achieve any success in the fight about grey economy, a complex approach is necessary. «Grey economy is not just tax avoidance or profit omission. It also consists of non-compliance with different rules and regulations, including those that govern the transport sector, construction sector, overtime and other aspects, which only serves to distort competition. In addition, combating grey economy is not the duty of only the State Revenue Service. It should be the main objective of the entire government, a priority for all ministries and institutions. In order to reduce the impact of grey economy, there has to be a transparent and predictable tax policy. Society needs to be educated why they should pay taxes and how those taxes are used, as well as introduce simple and comprehensive rules that would help companies to work responsibly and sustainably,» – notes Girts Greiskalns, CEO of Foreign Investors Council in Latvia.

«A smaller degree of grey economy is not an abstract benefit. It provides tangible benefits: smaller queues when going to the doctors, state funded catering for children in schools and kindergartens, good roads and more well-paid jobs, because investors acquire wider opportunities to work in conditions of fair competition, which motivates them to increase their investments. It is also worth keeping in mind that the fight against grey economy is like a marathon – it is long and hard work. It is also important to focus on long-term improvements for the economy, rather than sort-term benefits and bigger tax revenue,» – notes KPMG Baltics partner Armine Movsisyan.

Ref: 102.109.109.9623


Leave a reply

Second line of border fence to be erected by Hungary

Hungary has launched works to erect a second line of fence on its border with Serbia, Hungarian government announced on Monday, February 27.

Latvijas aptieka to gather previously bought pharmacies under its brand

Pharmaceutical company Olainfarm plans to add previously bought pharmacies to its owned Latvijas aptieka brand, according to information from Firmas.lv.

FCMC requests insolvency for Trasta komercbanka at court

Finance and Capital Market Committee has submitted a plea to Vidzeme District Court to find Trasta komercbanka insolvent, FCMC representatives say.

Healthcare Ministry hopes to attract doctors to work outside Riga using additional pay

Using single-time and monthly payments, Latvian Healthcare Ministry hopes to attract doctors to work outside of Riga.

Nekā personīga: FM promises cheaper life for Latvia; Lembergs objects

Finance Ministry promises cheaper life for Latvian residents. However, reduction of PIT would impact municipalities the most. Because of that, a situation has formed when Aivars Lembergs, the infamous Mayor of Ventspils accused of serious crimes, and Finance Minister Dana Reizniece-Ozola have come head to head.

Paulins steps down from his post in Latvijas Radio; criticizes NEPLP for lack of professionalism

Aldis Paulins, Chairman of the board in Latvijas Radio, has announced his decision to step down from his post in March.

Estonian company total profits down 10%, total sales – up 2%

The total profits of Estonian firms in 2016 have continued to decrease for the second year in a row and were 2.7 billion euros last year, which is a 10% fall, if compared to 2015.

RNP failed to notice that wrong companies were working on expensive contract

Rīgas namu pārvaldnieks failed to notice in time that the wrong companies were realizing a contract worth two and a half million euros. RNP made no efforts to make sure the companies that won the tender would tackle the realization of the order, as reported by De Facto programme.

Calendar of cultural events in Lithuania. Kaziukas Fair

BNN offers you a selection of cultural events in Lithuania for the week during February 27– March 5.

Opinion: Latvia and Lithuania share similar situations with grey economy

Latvia and Lithuania both have the same situation when it comes to combating the grey economy. This is because residents often justify the existence of envelope wages and other illegal symptoms, says the head of Lithuanian Free Market Institute Zilvinas Silenas.

Classic Nokia 3310 reissued

Almost 17 years after its original launch, Finnish company HMD Global has released a revamped version of the classic mobile phone.

Senate meeting to discuss RPIVA’s addition to University of Latvia

On Monday, 27 February, a Senate meeting will be held in the main building of the University of Latvia. During this meeting, it is planned to discuss the matter regarding the addition of Riga Teacher Training and Educational Management Academy to the university.

Mass protest in Moscow remembering slain Nemtsov

A Moscow memorial march of killed Russian opposition leader Boris Nemtsov has been attended by several thousand people.

Coalition partners do not oppose raising capital tax

Partners of the ruling coalition in Latvia have no objections against the possible labour tax reduction and capital tax increase.

Week in Lithuania. Lithuanian PM, Conservative leader hold unannounced meeting

The Lithuanian branch of Finland's OP Corporate Bank announced it will lend 19.69 million euros to the city of Vilnius, with the money to be directed towards refinancing of the municipality's earlier loans.

BNN summary of the week: less pay for overtime and citizenship for all in Estonia

BNN offers a summary of this week’s topical news in a variety of categories, including change, business, decline, truth, growth and future.

State Audit: Healthcare Ministry had no right to reveal RAKUS audit results

State Audit criticizes Healthcare Ministry for revealing facts from an audit report, as it is prohibited to publish information before reports come into force.

Piebalgs: UGF’s popularity is critically low, which causes concerns

«The popularity of the management of the Union of Greens and Farmers is critically low. This causes serious concerns. If we truly want things to change, politicians have to be dynamic and prepared to think outside the usual categories,» says Unity chairman Andris Piebalgs.

SFRS: young people express increased interest in becoming fire fighters

Youngsters tend to express interest in becoming fire fighters, said Chief of State Fire and Rescue Service Oskars Abolins told Rīta panorama, adding that this can be explained with increased wages.

Ex-KNAB officials: there was no reason to end the «oligarchs case»

Former officials of the Corruption Prevention and Combating Bureau believe the prosecutor’s office and KNAB had no reasons to end the so-called oligarchs case. Nevertheless, they are not surprised about this outcome.

Infrastructure in Kraslava and Ludza to be developed using EU finances

Central Finance and Contracting Agency and councils of Kraslava and Ludza have signed an agreement for the realization of a project co-financed by the European Regional Development Fund to develop infrastructure in regions and contribute to attraction of private investors, CFLA reports.

Poland «cleans» its army leadership from Soviet Era servicemen

In the Polish Armed Forces, around 90% of its highest servicemen have been substituted, as the country’s Defence Ministry performs was changes in the Polish army.

Balta: poor weather conditions significantly affect road quality

«In the first two months of 2017, we have received 59 insurance claims to cover losses caused low-quality road surface and more than EUR 20,000 has been reserved for compensations,» as reported by Balta insurance association.

GSK Latvia board member appointed as chairman of Children's Clinical University Hospital

Valts Abols has been appointed as the head of Children's Clinical University Hospital. For the past 20 years he worked in managing posts of GlaxoSmithKline Latvia pharmaceutical company, as reported by Healthcare Ministry.

Estonia celebrates 99th anniversary since declaration of its independence

On February 24, it is Estonia’s Independence Day, which commemorates the time in February 1918, when a short period of foreign power vacuum was used to declare the establishment of the Republic of Estonia.

Newest comments