bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Tuesday 11.12.2018 | Name days: Valdis, Voldemārs, Valdemārs
LatviaLatvia

EY: long-term vision for systemic growth is next Saeima’s challenge in tax field

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe next Saeima’s main challenge in tax policy will be long-term vision for the system’s development, said EY partner in Baltic States and tax practice manager Ilona Butāne in an interview.

«We should have to ability to predict the evolution of the tax system in response to change of different medium and long-term factors, such as growth of productivity, welfare, population size and age, as well as change of economic conjuncture. Important matters include ensuring the systems stability, attractiveness and formation of reserves for problematic periods. Until now the government has not discussed these matters in depth even though discussions on those topics have taken place in academic and administrative offices. This is the main challenge – overcoming the usual short-term plans of the Saeima and instead planning long-term evolution of the tax system,» stresses Butāne.

She also says Latvia has only recently performed a tax reform. Because of that, it would be unfortunate to see new deputies to tackle new changes all over again. Instead it would be best to wait for several tax cycles to see how taxpayers’ behaviour changes.

«I believe there is a lack of understanding as to how residents and businessmen might act under the new tax regime and what consequences we can expect. What will people with large income do, knowing that a progressive tax rate will be applied to them? How will businessmen react, knowing that they will not have to pay corporate income tax, but requirements for proper accounting of non-economic expenditures will be much stricter than before?» asks Butāne.

She also mentioned Estonia, where the practice of applying zero corporate tax on reinvested profits has been present for a long time. «After many years without corporate income tax it has been concluded that businessmen simply choose not to divide profits – the tax ends up postponed indefinitely. As a result, Estonia is now forced to adopt new tax solutions. These challenges are what the future has in store for Latvia. Politicians will have to decide what they should do when the consequences of reforms appear,» said EY partner.

She also says tax collection problems are not associated with tax rates – rather it is because of grey economy. This is why combating VAT fraud schemes should become a priority, as should the matter regarding the reduction of cash circulation in the economy.

«Cash is the blood of grey economy – to pay envelope wages, one needs cash. This is where VAT fraud schemes come into play. Then this money ends up in retail trade sector. This circulation needs to be halted for good at some point. One way is banning cash deposit in ATMs – I’m not saying illegal money is deposited, but I see no legitimate reason why people should make deposits worth millions if all money is acquired legally. Such a step will definitely create pressure and force more transactions made using non-cash, because people have to pay leasing, loans, etc. In other words, they have to have money on their account, not in their pocket. Non-cash transactions are much easier to control from a tax administration view,» says Butāne.

She also mentioned that raising taxes would not be a good solution, because the tax burden should be measured in accordance to the welfare level in the country, and Latvia is significantly behind western countries.


Leave a reply

May defers doomed Brexit vote, rushes to European capitals

British Prime Minister Theresa May will visit Germany's Angela Merkel Tuesday as she works to salvage her Brexit deal, the day after delaying a parliamentary vote on it to avoid a crushing defeat.

Latvian politicians still see way to agree on new government

In spite of the failed second attempt at forming a government, Latvian politicians say there are still ways they can reach an agreement. At the same time, parties maintain their respective red lines, according to representatives of parties.

Marcon makes tax concessions, 'yellow vests' calling for continued protests

French President Emmanuel Macron, seeking to calm the 'yellow vest' mass protests, has made major tax and pay concessions, but plans to keep his climate-saving policy straight.

Latvian president calls of KPV LV leader Aldis Gobzems nomination

Latvian President Raimonds Vējonis has decided to withdraw the nomination of KPV LV leader Aldis Gobzems as prime minister candidate.

KPV LV faction pledges support to Aldis Gobzems

Saeima faction of KPV LV has pledged support to its prime minister candidate Aldis Gobzems to lead the government formation talks.

Study: more should be done to make tax procedures easier

The four main indexes for business tax commitments have not changed much globally: commitment compliance time (237 hours); number of payments (23.8); total tax and duties rate (40.4%) and post-declaration index (59.6 out of 100), as concluded in the Paying Taxes 2019 study by PwC and World Bank Group.

Inflation in Latvia reaches 3% in 2018

November 2018, compared to November 2017, the average level of consumer prices rose by 3.0 %. Prices of both goods and services grew by 3.0 %. Compared to 2015, consumer prices were 6.8 % higher in November 2018. Prices of goods increased by 5.9 % and prices of services by 9.1 %.

Estonian hospital to make patients pay for uncancelled doctor appointments

In Estonia, Ida-Viru Central Hospital plans to introduce asking patients to pay for a scheduled specialist appointment, if the patient does to visit the doctor and has not notified the hospital in advance.

Politologist: two weeks in government formation is lost time

Two weeks spent in government formation is lost time, because budget development has not even started. However, the current situation may pave the way for a new prime minister, because several of the previously voiced red lines have been erased, says interior policy expert Ieva Bikava.

In pictures: Mass demonstration in Vilnus in solitarity with teachers' strike

A large protest has been held in Vilnius, with many Lithuanians gathering in solidarity of a teacher strike currently held by over thousand workers of schools and kindergartens across the Baltic country.

KPV LV prime minister candidate to present president with three scenarios

Prime minister candidate Aldis Gobzems from KPV LV will present Latvian President Raimonds Vējonis with three possible scenarios for government formation this Monday, 10 December.

EU court: Britain can unilaterally stop its divorce from EU

The European Court of Justice has found in a ruling that the UK has the right to cancel its withdrawal from the European Union unilaterally, without the support of the other 27 EU members.

Weather in Latvia expected warm at weeks beginning; air temperature to drop again later on

Weather in Latvia will be cloudy and rich with precipitation this week. Air temperature may remain positive until the middle of the week, but colder masses of air will flow to the country shortly after that. More snow is also expected, as reported by Latvian Environment, Geology and Meteorology Centre.

150 countries convene in Morocco to endorse UN Migration Compact

The UN conference to endorse the UN Migration Compact, starting in Marrakech, Morocco on Monday, December 10, will be attended by politicians from 159 countries.

Politologist: Artis Pabriks would not be a good choice for prime minister

Latvian President Raimonds Vējonis should nominate a neutral politician as the next prime minister candidate, someone who hasn’t insulted New Conservative Party and KPV LV yet, says politologist Juris Rozenvalds.

In Armenia election, landslide victory to Pashinyan's bloc, results show

In Armenian early parliamentary election, held on Sunday, December 11, the political bloc led by Armenia's acting prime minister, Nikol Pashinyan, won, according to the Central Election Commission.

Week in Lithuania. President signs decrees on three ministers' dismissal

President Dalia Grybauskaite on Friday, December 7, signed decrees to accept the resignations of Jurgita Petrauskienė as education and science minister and Liana Ruokytė-Jonsson as culture minister and to dismiss Kęstutis Navickas from the post of environment minister.

BNN summary of the week: Plan B; Lithuania's fired ministers; Pasažieru vilciens' bothers

BNN offers a summary of this week’s topical news in a variety of categories: Surprise; Victory; Growth; Commitment; Decision; Complaint; Government.

Snow and ice create problems for drivers in Latvia

In spite of several trips coating roads with anti-freeze and clearing them of snow on Friday, 7 December, driving conditions remained complicated in many parts of Latvia in the afternoon.

Share of fast loans extended three and more times increases in Latvia

Lending volumes in the non-banking sector in Latvia continue growing in the first half-year of 2018 – the total loan portfolio of lenders’ had grown 7.11%, reaching EUR 655.82 million, by the end of June.

NCP does not consider KPV LV offer as serious; says government formation impossible

Considering the term given by Latvian President Raimonds Vējonis to KPV LV leader Aldis Gobzems, he simply has no way to form a sustainable government, says New Conservative Party’s leader Jānis Bordāns.

Aldis Gobzems withdraws his government offer extended to political parties

Latvian prime minister candidate Aldis Gobzems from KPV LV has decided to withdraw his government offer extended to political parties. He plans to invite non-party professionals to the new Cabinet of Ministers. «If my proposed government composition is not approved, I will ask President Raimonds Vējonis to announce emergency elections,» said Aldis Gobzems.

Estonian private clinic is facing criminal investigation

Estonian prosecutors have opened a criminal investigation against Medita Klinik, a leading competitor in public procurement tenders in Estonian health care. Estonian Northern District Prosecutor's Office has initiated the investigation in accordance with the Penal Code section concerning the transmission of false information, according to ETV investigative show Pealtnägija.

Meat consumption in Sweden continues to drop significantly

Meat consumption in Sweden is at its lowest level since 1990 and continues to decrease, data by the Swedish Board of Agriculture showed.

Medieval cemetery found in Old Riga in front of the Saeima

Results of archaeological digging performed at St Jacob’s Church in Riga in summer and autumn turned out rather surprising. This is because these results reminded researchers of a forgotten fact – that there had once been a large cemetery near the Jacob’s Cathedral in the Medieval Age. Remains of this cemetery are located basically in front of the Saeima’s front doors, in fact.