Latviski English По-русски
Sunday 18.03.2018 | Name days: Ilona, Adelīna

Reizniece-Ozola is asked to improve Latvia’s attractiveness for venture capital funds

(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian Economy Minister Arvils Aseradens has turned to Finance Minister Dana Reizniece-Ozola with a written request to change the ministry’s established practice to apply PIT on pension fund income from participation in venture capital funds.

Economy Ministry notes that Latvia’s tax legislation does not provide for that, and Finance Ministry’s practice makes Latvia less attractive in the eyes of venture capital funds.

«We have to immediately look for solutions to make Latvia more attractive. Leaving this matter unattended will result in investors choosing to invest in countries with better legislation. This negatively impacts Latvian residents’ pensions and their deposits in the national economy and impedes the inflow of foreign investments in Latvia and their availability for start-ups and rapidly-growing companies. This impacts not only national growth plans, but also the goal for Latvia to become Nr.1 choice for investments in Baltic States,» said Aseradens.

The minister explains that the first effects from Finance Ministry’s regulation have already appeared. BaltCap Growth Fund decided to register in Estonia in spite of the previous decision to establish a foothold in Latvia. Following the registration of BaltCap Growth Fund in Estonia, Latvia’s venture capital industry has lost around EUR 40 million. BaltCap is the leading venture capital investor in Baltic States.

Economy Ministry believes this decision by BaltCap may serve as a signal for other investors to stay away from Latvia.

As the main reason for its decision to register the fund in Estonia, BaltCap Growth Fund mentions the practice employed in Latvia to apply pension funds participating in venture capital funds with PIT, not CIT. Finance Ministry’s used legislation creates a situation when successful pension deposit funds have to pay tax and compensate transactions that do not bring profit from their own wallets. This means funds have to pay taxes even if they work with losses, Economy Ministry states.

Edgars Pigoznis, chairman of Latvian Venture Capital Association, says: «If we apply pension fund deposits in venture capital with PIT, we will not only cut off part of the people who sustain the risk capital industry, but also reduce our own pensions and slow down Latvia’s economic development.»

He says pension funds are traditionally the main investors in venture funds. «Venture capital investments contribute to the creation of growing and innovative companies, which, in turn, improves the country’s national economy and competitiveness. If we as a society want to live better and earn more, we should invest in companies that work with high added value and pay better wages and taxes,» Pigoznis continues.

Economy ministry also says Finance Ministry’s position will also create difficulties for Altum 2014-2020 planning period’s selected venture capital managers. «Latvian and foreign pension funds are the most important investors for the country’s venture capital funds, and the country’s current tax legislation in its current interpretation makes it difficult for them to attract private investments.»

To prevent unfavourable conditions and outflow of venture capital funds from the country, Economy Minister Arvils Aseradens invites Finance Minister Reizniece-Ozola to start an immediate dialogue.


Leave a reply

  1. Zerry says:

    As long as grey economics and corruption remains this level there is no need to think where are all investors.

    Thumb up 0 Thumb down 0

BNN summary of the week: oligarch talks’ ownership; scandals in Lithuania; Estonia wants direct democracy

BNN offers a summary of this week’s topical news in a variety of categories: Progress; Scandals; Invitation; Fight; Opinion; Decline.

Remembrance day of Latvian Legionnaires passes with shouts and two arrests

The Legionnaires’ remembrance procession in Riga on Friday, 16 March, passed peacefully. Nevertheless, several conflicts did take place among differently-minded people near the Freedom Monument. Two individuals were arrested by police.

Influenza intensity in Latvia – moderate when compared to other European nations

A comparison of influenza activity in Europe shows that it is high or very high in several countries. Latvia’s influenza intensity is considered moderate, as noted by epidemiologist Raina Nikiforova.

Hourly labour costs in Latvia grew 7.3% in 2017

Compared to Q4 2016, in Q4 2017 hourly labour costs rose by 54 cents or 7.3 %, reaching EUR 8.02. Seasonally adjusted data show identical changes – rise of 7.3 %.

Rietumu Banka claims it has not worked with high-risk clients for years

Rietumu Banka has been steadily rejecting high-risk clients for years and has significantly reduced the volume of transactions, as mentioned by the bank’s representatives.

Lithuanian and Estonian businessmen are ahead of Latvia in terms of investments

In Latvia, 36% of small and medium-sized companies have plans to invest in the development of their business this year. In Estonia and Lithuania, on the other hand, the proportion of businesses with development plans is 42% and 46%, respectively, according to results of a recent study performed by SEB Bank.

Russia pledges maximum pressure on UK amid ex-spy poisoning row

Russian top diplomat in the UK has envisaged on Friday, March 16, that the Kremlin would use maximum pressure on London as Moscow insists it has not been involved in the poisoning of a former Russian-British double agent with a Russian-made chemical weapon, as has been found by British investigators.

Latvia’s ministry: Crimea’s annexation is illegal

18 March 2018 will mark four years since the Russian Federation violated Ukraine’s sovereignty and territorial integrity by annexing the Crimean Peninsula and causing military aggression in the country’s eastern region. With its actions the Russian Federation has violated international law and basic principles of international relation, says Latvia’s Foreign Affairs Ministry.

Building gas pipe to Finland, Estonia to organise works for EUR 135 million

Continuing the works on the Balticconnector gas pipeline between Estonia and Finland, the Estonian natural gas network company Elering has stated that around 135 million euros, including a 98-million-euro funding from the European Union, will be invested in the project.

Replacement of cash registers rejected by SRS would cost half a million euros

The State Revenue Service has declined 18,000 cash registers as unfitting for requirements established by the Cabinet of Ministers. Fixing the problems found in them would cost half a million euros, as reported by LNT News.

Latvian Anti-Nazi Committee presented with protest restrictions on 16 March

Administrative District Court has compiled a shortened ruling, in which it rejected Latvian Anti-Nazi Committee’s application and preserved the decision imposed by Riga City acting CEO on 13 March 2018 on establishing restrictions on the planned gathering and protest act for 16 March unchanged.

U.S. introduces Russian sanctions for election meddling and cyber-attacks

Washington has introduced sanctions against 19 Russian individuals and five entities blaming them for attempts to sway the 2016 U.S. election and perceived cyber-attacks.

Slovakian PM Fico replaced with fellow party member

Slovakian head of government Robert Fico has stepped down after the murder of a journalist shed light on corruption in Slovakia, prompting nationwide protests. The long-standing Prime Minister had offered to resign earlier this week if the ruling coalition was allowed to finish its term.

Weekends will be cold and sunny in Latvia; next week will have volatile weather

Starting with Sunday, 18 March, air temperature in Latvia will rise above zero in most of the country, as reported by State Environment, Geology and Meteorology Centre.

Lithuania’s ruling LFGU party remains unscathed by scandals

It seems that, for now, Lithuania‘s ruling Farmers and Green Union has been nearly damage-proof despite the lambasting.

Latvian Civic Alliance: non-government sector should aim towards cooperation

Latvian Civic Alliance has invited the management of Latvia’s Chamber of Commerce and Industry to meet to discuss ongoing cooperation between organizations representing the business sector and the NGO sector.

Saeima rejects National Alliance’s proposal to make 16 March an official remembrance day

Latvia’s Saeima has decided to reject the proposal submitted by the National Alliance on making 16 March an official remembrance day.

43.6% of Latvian households have difficulties with making ends meet

In 2017 the share of households admitting that pay for usual necessary expenses with difficulty or great difficulty constituted 43.6 %, which is 1.5 percentage points more than in 2016.

Saeima voices support for Rail Baltica project’s progression

On Thursday, 15 March, the Saeima made a decision to support Rail Baltica project’s progression. In its decision, the parliament invited Latvia’s Cabinet of Ministers to provide all the necessary support for the project’s successful realization to ensure the project is realized in accordance with established terms and does not lose funding or support from the European Union, as reported by Saeima’s press-service.

Fast snow shovelling linked to cardiac fatalities, Finnish study finds

In Finish doctoral study, it has been concluded that snow should be shovelled calmly, not provoking stress and increased adrenaline in human blood that could lead to cardiac arrest.

Riga’s mayor spent at least eight million euros of residents’ money to promote himself

Over the course of the past three years, at least EUR 8 million of residents’ money has been used to promote the image of the Mayor of Riga Nils Ušakovs. This money was used to buy media, employ young members of Harmony, and finance ‘in-house protestors’ and using social networks, as estimated by Re:Baltica research journalism center.

Slovenia's head of government resigns amid protests and struggling railway investment

The Slovenian head of government Miro Cerar has stepped down from office in reaction to troubles with an expensive railway project and mounting opposition by trade unions.

NAF Commander: Latvia and Estonia have joint military procurements planned

Latvia and Estonia have joint military procurements planned, Commander of Latvia’s National Armed Forces Leonīds Kalniņš told journalists after his meeting with Commander of Estonia’s Defence Forces Riho Terras.

Estonia's switch to free higher education proved right choice, says Ratas

The switch to free higher education made by Estonia in 2013 has proved to be the right choice for a small country, even though critics have pointed to potentially less motivated students, has stated the Estonian Prime Minister Jüri Ratas.

President: we will not give away our scientists’ ideas for free

It is necessary to concentrate all resources on research performed by Latvian scientists with patent potential. This will help secure returns for Latvia’s national economy, said President of Latvia Raimonds Vējonis during his meeting with rector of Riga Technical University Artūrs Zeps.

Newest comments