It will be easier to identify those who do not fully report income

Last week, the Seimas submitted for consideration to the Budget and Finance (Taxes) Commission Bill “Amendments to the Law “On Taxes and Duties””.

In accordance with current regulations Law “On Taxes and Duties” The SRS has the right to receive from payment service providers, processors of payment card transactions and institutions working with electronic money data on their economic and financial activities. The SRS may also request information from credit institutions about payments made from client accounts, without identifying the payer.

However, as indicated in the explanation to the bill, the SRS’s access to this information is limited, and the lack of a uniform standard for the presentation of data makes it difficult to effectively process it and identify payment recipients.

It is planned that the expansion of the powers of the State Revenue Service to use information provided by payment service providers will provide a more complete understanding of the activities of taxpayers in areas that were previously difficult to control, such as cross-border transactions and e-commerce.

By analyzing data received from payment service providers, together with information held by VID, it will be possible to identify individuals and legal entities that:

• do not declare transactions in PVN declarations or in a special PVN regime, avoiding paying tax in Latvia and Europe;
• incorrectly declare the number of employees and wages, avoiding social contributions and personal income tax;
• incomes are not fully reflected in annual reports;
• have not registered or do not fully declare their economic activities;
• may be operating in Latvia without registering in the taxpayer register and without paying taxes in the country.

Such changes will make it possible to more effectively combat tax evasion and provide more equal conditions for competition in business.