Financial Services, Latvia, Legislation, Markets and Companies, Taxation

The Latvian government had sought assistance at the European Commission’s Structural Reform Support Service, and the WB has concluded an agreement with the European Commission, the WB representatives said.

The size of Latvia’s shadow economy is an estimated 25% of the official GDP, whereas the average size of shadow economy in the member states of the Organization for Economic Co-operation and Development (OECD) is 14%. This is why improving the efficiency of tax administration is the government’s priority.

Carlos Pinerua, the WB Country Manager for Poland and the Baltic States, indicated that the WB will concentrate its analytical work in Latvia on three main areas – VAT evasion, liability management and audit and the analytical capacity of the State Revenue Service.

The WB will provide technical support in cooperation with the European Commission’s Structural Reform Support Service. It will include analysis of various kinds of VAT fraud and recommendations for the prevention of VAT fraud in particular segments of the economy.

The WB will also work out methods and tools for the detection of VAT gaps in various kinds of businesses, for instance, in small, medium-sized and large companies.

The European Union is funding the project by using the European Commission’s Structural Reform Support Program.