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Ceturtdiena 24.05.2018 | Name days: Marlēna, Ilvija, Ziedone
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Insurers to combat rogue car services

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Insurers will try to combat « rogue car services» not paying taxes through economical methods.

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Juris Stengrevics

Insurers have joined in combating tax evasion by pushing amendments in the OCTA Law (the Saeima approved them in the first reading), setting security as one of the key aspects. They stipulate that in case of road traffic accident, the owner of the damaged car chooses to receive compensation in cash rather than repair the car at auto service arranged by the insurer. In that case the compensation will be paid without VAT.

However, if the car owner will have repaired the vehicle at any other car service and will be able to produce cheques confirming that taxes have been paid for services, if the car service is the VAT payer, the insurer will also cover the VAT.

The Latvian Motor Insurers’ Bureau (LMIB) board chairman Juris Stengrevics explains that often the owner of the damaged car opts for a cash settlement, yet the vehicle is not repaired after receiving the money and the obtained financial means are directed to other purposes, for example, loan repayment and purchases, reports Dienas Bizness.

In December 2010, the State Revenue Service (SRS) director-general Nelija Jezdakova and Andris Kulbergs, president of the Latvian Authorized Automobile Dealers’ Association (LAADA), signed an unprecedented cooperation agreement to combat tax evasion and «envelope wages», as well as promote fair competition in the car service industry.

According to Kulbergs, the situation in the sector is critical and there is a risk around 95% of businesses pay taxes only partially. It is already a norm – cheap or stolen material purchases, lowering the quality of services provided. Within five years, the LAADA, in cooperation with state institutions, leasing and insurance companies, plans to unite companies that would operate under uniform tax ethics, service, quality and environmental standards.

Moreover, Kulbergs recognizes by promoting fair competition and combating dishonest tax dodgers, the Association intends to lead these companies on the right path and incorporate them in the Association. It has also resolved to attain the average gross wage increase in the sector from 246 to 705 lats within five years, legalizing «envelope wages».


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  1. Moo says:

    Know many who do this…

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