bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 23.02.2020 | Name days: Haralds, Almants

Shadow economy in Latvia is nearly twice as large as it is in neighbouring countries

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUCompared with 2013, the volume of shadow economy in Latvia did not change much in 2014. In Lithuania and Estonia, on the other hand, the volume of shadow economy actually managed to decrease that year. Such is the conclusion made in the survey of the shadow economy index in Baltic States published by Stockholm School of Economics in Riga and SEB Bank.

Latvia’s shadow economy volume, expressed in percentage from GDP, was 23.5% in 2014. Compared with 2013, Latvia’s level of shadow economy had decreased by a mere 0.3% of GDP. In Estonia and Lithuania, shadow economy reached 12.5%-13.2% of GDP in 2014. These two countries continued their long-term tendency toward a gradual decrease of shadow economy in their regions. It is concluded in the survey that the level of shadow economy in Latvia’s neighbouring countries has reduced by approximately 2.5-2.8% in comparison with 2013.

Although no changes have been observed in the volume of shadow economy in Latvia, what has changed is its composition. In 2014, the largest part of shadow economy in Latvia consisted of undeclared revenue from business activities in the form of tax avoidance, which currently comprises 46% of the total volume of shadow economy in Latvia. The second largest part of shadow economy in Latvia consists of envelope wages. The proportion of Shadow economy in Latvia’s construction field is calculated to be close to 48.9% (compared to 20% in Lithuania and Estonia). It is possible that partially because of construction industry that the highest level of shadow economy in Latvia was noted in Riga in 2014. Estonia and Lithuania both have the highest volume of shadow economy in this field, but its proportion is on a much more moderate level – 21% and 19%, respectively.

Enterprises remain relatively satisfied with the Latvian State Revenue Service and remain openly dissatisfied with the government’s employed tax policy and the level of assistance for entrepreneurs, as mentioned in the survey.

In general, Latvian enterprises are mostly dissatisfied with government structures. The same cannot be said about enterprises in Estonia and Lithuania. Nevertheless, the trends have been changing lately: there has been a decline in the level of dissatisfaction with government structures in Latvia and an increase in Estonia.

It is also stated in the survey that smaller and younger enterprises are more prone to getting involved in shadow economy than larger and older enterprises. The survey of 2014 also measures the volume of non-registered business activities in Baltic States. According to data from the survey, non-registered enterprises make up approximately 5-8% of all enterprises present in Latvia. They are mostly found in the construction industry.

Authors believe that the growing difference between the proportion of shadow economy in Latvia and its neighbouring countries somewhat reflects the weakened attempts of Latvian politicians to combat shadow economy. In order to reduce the volume of shadow economy, authors of the survey recommend Latvian legislators to realize the second package of large-scale measures against shadow economy, similar to what was done in 2010-2013. Reforms should focus on combating tax avoidance and construction industry, as these are the two most problematic areas.

Head of Latvian State Revenue Service Inara Petersone notes: «It is because of active work of SRS that it was possible to realize multiple measures to improve the business environment and amendments to regulations aimed at limiting and completely preventing any and all economic activities of dishonest taxpayers. We will continue realizing measures to reduce shadow economy in the future as well. I would like to point out – SRS is but one of many structures involved in the combating of shadow economy. Results of the survey only serve to demonstrate that only active and coordinated measures can help successfully combat shadow economy in a long-term perspective. I believe society’s acceptance of the necessity to pay taxes honestly and intolerance of tax avoiders also plays a major role. If we allow tax avoidance on any level, society as a whole will suffer in a long-term perspective. People will be unable to receive services from the government. This applies to social, education, law enforcement, healthcare and other important services!»

Chairperson of Latvian Chamber for Commerce and Industry Janis Endzins says: «Even though economic development of Baltic States is more or less unified, there are some areas in which Latvia lags behind its neighbours. One such area is successful combating of shadow economy, which has turned out fruitless in recent years. According to the published report, one reason is that Latvia’s volume of shadow economy remains incredibly high (23.5%) in spite of the positive dynamics noted in neighbouring states. Many experts believe this is merely the tip of the iceberg, and that the actual shadow economy in Latvia is much more expansive.»

SEB Bank social economics expert Edmunds Rudzitis states: «Shadow economy and envelope wages negatively impact the revenue of the state budget and distort competition in the country’s business environment. Short-term benefits received by individuals in the form of envelope wages are small in comparison with long-term risks the individual and the state will have to tackle as a result of that. Envelope wage recipients and those who do not declare their income will be at risk of poverty in the future. According to results of Pensionometer – 43% of all employed people fall under this category».

Ref: 102.109.109.6789


Leave a reply

  1. Name it says:

    Why have you become a shadow? Run abroad. Statistics says: as a duck you are flying in the end of a row. Try to become a winner. Hidden Taxes – problems With a Democracy.

  2. marie says:

    Depuis presque 4 ans, nous poursuivons une citoyenne Lettone du nom d’Anna Mutore née en 1962 qui exerce l’activité de traductrice à la Saiema, Elle s’est enrichie avec la complicité de sa fille Rasa Mutore en spoliant des français. Nous avons mis en évidence qu’elle n’a pas écrit sa thèse sur la majuscule distinctive. Nous avons identifié l’auteur…..
    Nous doutons qu’elle ait déclaré à l’administration fiscale Lettone l’argent qu’elle a soustrait. Elle entre dans la catégorie de l’économie de l’ombre,

Financial Action Task Force decides to not add Latvia to its «grey list»

The world’s central anti-money laundering organization Financial Action Task Force has decided to not exercise increased monitoring of Latvia. This means the country will not be added to the organization’s «grey list», as LETA was informed by Latvian Prime Minister Krišjānis Kariņš’s office.

Latvian minister outlines Germany as an important strategic partner

Germany is a strategically important economic partner for Latvia, said Latvian Foreign Affairs Minister Edgars Rinkēvičs during his meeting with Germany’s Federal Minister for Economic Affairs Peter Altmaier on Friday, 21 February.

Access to illegal TV content denied to 11 000 Latvian households last year

In 2019 access to illegal TV content in Latvia was denied to 11 000 households. A dozen criminal processes have been commenced over illegal supply of audiovisual content, as reported by State Police.

Producer price level in Latvia’s industry down 1.3%

Compared to December 2019, the level of producer prices in Latvian industry didn't change in January 2020. Prices of products sold on the domestic market reduced by 0.7 %, but prices of exported products – increased by 0.7 %.

In China, coronavirus hits prisons as 500 prisoners and guards infected

In China, the outbreak of the dangerous coronavirus continues, over 500 cases of infections have been registered in prisons. Meanwhile, death toll from health problems related to the virus has reached 2 236, according to The Guardian.

Saudi Arabia provides Latvian companies stable tax regime

Latvia and Saudi Arabia have plans to provide businesses with stable tax regimes for companies working in each respective country without coverage from the other country’s regulations, as reported by Saeima’s press-service.

Estonia accuses Russia over large cyberattack against Georgia

Estonian Foreign Minister Urmas Reinsalu has stated that Estonia, just as Georgia and a number of Western countries, sees a Russian intelligence service as having perpetrated a large cyberattack on Georgia in autumn 2019, according to a statement on the web site of the Estonian Foreign Ministry.

Latvian Healthcare Ministry puts third stage of e-health project on hold

Healthcare Ministry plans to focus on existing e-health services and will not develop their next stage, said minister llze Viņķele at a press-briefing on Friday, 21 February.

Latvian Saeima decides to reduce planned excise tax rise for alcohol

The increase of excise tax rate for alcoholic beverages planned for 1 March will be more moderate. This much is provided by amendments to the Law on Excise Duties approved in the final reading by the Saeima on Thursday, 20 February, as reported by Saeima’s press-service.

Irish PM Varadkar loses confidence of parliament

Irish prime minister Leo Varadkar has stepped down from office after he failed to win the confidence of the majority of the new composition of the Irish legislature, British news portal The Guardian reports.

National Electronic Mass Media Council agrees on members’ duties

Latvian National Electronic Mass Media Council, following the election of two new council members, has agreed on duties of members, as confirmed by newly-elected NEPLP members in an interview to Latvijas Radio.

Shareholder Juris Radzevičs dismisses Rīgas namu pārvaldnieks board member

Juris Radzevičs, who is a shareholder in LLC Rīgas namu pārvaldnieks has dismissed RNP board member Ardis Pāvilsons, as LETA was told by the official.

Germany remembers victims of Hanau shooting; attacks investigated as terrorism

In Germany, the death toll of the Hanau shooting attacks has risen to nine people. Police has pointed to a possibly racist mindset of the suspected attacker and is investigating the crimes as terrorism, BBC and DW report.

Experts predict number of electric vehicles in Latvia exceeding 36 000 by 2030

There will be more than 36 000 electric vehicles in Latvia by 2030. This prediction was voiced by AS Latvenergo board member Kaspars Cikmačs during Clear Energy for Transports conference on Thursday, 20 February.

Highest volume of harvested grains recorded in Latvia’s history in 2019

In 2019 the highest harvested production of grain was recorded – 3.2 million tonnes, which is 1.1 million tonnes or 1.5 times more than a year ago.

Denmark cancels Misāne’s extradition to SAR in favour of extradition to Latvia

On Thursday, 20 February, the Danish court approved the decision of the Danish office of the prosecutor to cancel Latvian citizen Kristīne Misāne’s extradition to the South African Republic. On top of that, the Danish office of the prosecutor has also decided to extradite the woman to Latvia instead, as reported by Ritzau.

Warmest winter anyone can remember is wreaking havoc on Lithuania’s nature and store shelves

This winter, so abnormally warm in Lithuania, is bewildering everyone and is wreaking havoc both in the nature and on the store shelves.

Finnish court acquits Baltic online alcohol seller over tax evasion

A court in Finland has delivered a not guilty ruling in a case, where a man had been charged with tax evasion over the online sale of alcohol to Finns in Latvia and Estonia, using online platforms, Finnish broadcaster YLE reports.

Latvian Saeima committee to consider initiative to establish a park at former Marss cycling track

On Thursday, 20 February, the Saeima decided to submit the collective initiative on establishing a part on the territory of the former cycling track Marss to the parliament’s National Security Committee for review, BNN was told by Saeima’s press-service.

Ruling in Maxima tragedy criminal case to be appealed

Riga City Pārdaugava Court’s ruling in the Maxima tragedy criminal case will definitely be appealed, said senior prosecutor Aivars Ostapko in an interview to Latvijas Radio on Thursday, 20 February.

Proposal voiced to deny Aivars Lembergs the option to enter the Saeima

A proposal has been voiced to deny suspended Ventspils mayor Aivars Lembergs, who is accused of committing serious crimes and is added to the list of sanctions of USA, the right to participate in Saeima’s activities, according to information from LTV.

Latvian police liquidates fake news site www.aumytests.net. Employee detained

Latvian State Police has detained a 2001-born young man for reporting fake news, BNN was informed by police.

Cyber security drill held by Estonia in NATO Parliamentary Assembly

In Brussels, during the NATO Parliamentary Assembly, Estonian experts have held a strategic cyber drill, where member state legislators have been asked to look for solutions in a simulated cyber incident, ERR reports.

Turkey warns of military operation in Syria to stop government-Russian forces

Turkish President Recep Tayyip Erdoğan has stated that Turkey’s offensive in north-eastern Syria could start at any moment with the aim of stopping an offensive of the Syrian government and Russian forces on opposition-controlled territory, BBC reports.

Riga Zoological Garden board members Līdaka and Morozovs laid off

Both Riga National Zoological Garden’s chairman of the board Ingmārs Līdaka and board member Andris Morozovs have been fired from their respective posts, as confirmed by Līdaka.

Newest comments

Do NOT follow this link or you will be banned from the site!