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Sunday 15.07.2018 | Name days: Henriks, Henrihs, Egija, Egmonts, Egons

Economic diary of Latvia. Only honest taxpayers to receive state orders

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEnterprises that wish to participate in state procurement projects must not have tax payment debts of any kind.

This new regulation is included in amendments to the Law on State Procurements that were approved by deputies of the Saeima National Economy Committee. Amendments are now required to be approved by the Saeima.

If the Saeima approves these amendments, state customers will be obligated to assess the justification of prices of offered services. Particularly, the average wage in the company that offers the service and its mediators must not be below 80% of the average level in their category of professions. The client will be able to request information from the tax administration. The State Revenue Service will be obligated to respond within 15 days.

In accordance with new rules, state and municipal institutions will be obligated to inspect potential service providers in the initial procurement phases and immediately exclude tax avoiders.

Entrepreneurs, on the other hand, must not have debts above EUR 150 on the day of announcement of a tender and the day of the signing of a contract.

On top of that, amendments also contain an additional norm regarding the so-called green procurement, which will provide advantages to local producers of food products in state procurement projects starting this November.

All debtors to be monitored

The Saeima has approved the Law on Crediting Bureaus. It will come into force on January 1st, 2015. Experts believe the appearance of crediting bureaus will limit abilities of irresponsible lenders to new loans. For honest people, however, this will provide better conditions for loans.

The current situation is such that information regarding loan commitments and discipline level of lender is not compiled by anyone. Information regarding lenders is provided to the acting credit register, which is managed by the Bank of Latvia, only from financial institutions. Collector agencies also maintain databases, but these only contain information about lenders who do not pay back their debts.

In general, the situation continues to improve, but the volume of unpaid loans remains large. According to information from the Finance and Capital Market Commission, one-fifth of loans provided to Latvian households were not paid back in time in Q2 2014. At the same time, according to the Consumers’ Rights Protection Centre, 8 out of 10 loans were returned without delays in the non-banking sector last year.

The new law, however, provides for the compilation of data from all state systems and entrepreneurs. This will allow crediting institutions to assess risks and solvency of their clients more carefully, because they will have more information about their potential customers’ financial history.

At the moment, there is no clarity about the process of information exchange with suppliers of goods and services, as noted by analysts from Swedbank.

‘The system will work at highest capacity only if it provides good accessibility of a wide range of information that will allow a detailed assessment of a potential customer’s ability to take on loan commitments,’ – as noted by analysts.

Residence permit programme has brought Latvia EUR 1 billion

From July 1st, 2010 to July 1st, 2014, non-residents invested a total of EUR 1,017 billion in Latvia’s economy in exchange for residence permits. This data comes from a report from Latvian Interior Ministry.

It is noted in the report that this money has contributed to Latvia’s economic growth. This programme has largely benefited sectors like economy, finances, real estate, tourism, legal services, insurance, catering, medicine and others.

Interior and Economy ministries note: the bulk of the money invested by non-residents was provided to real-estate (EUR 837.5 million or 82.4%), followed by – subordinate banking commitments (EUR 837.5 million or 12.4%). EUR 52.9 million or 5.2% of the whole amount was invested into Latvian enterprises.

Analysts note that activity of foreigners is not restricted to only investments that are provided in exchange for residence permits. In 2013, investors who received residence permits through the purchase of real estate properties or bank deposits held posts in 555 and owned shares in 610 Latvian enterprises.

The Residence Permit programme has also brought the state budget EUR 111 million in the form of duties.

In total, requests to be provided with residence permits have been submitted by representatives of 41 countries of the world, including 90% of the countries of the former Soviet Union.


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