The Use of Tax for Micro-Enterprises Will be Banned in 37 Industries

The government decided today that tax for micro-enterprises will not be applied in 37 industries.

Today, the government approved Regulations “Industries, where the Tax Regime for Micro-Enterprises is not Applied”. The document lists areas of activity, in which the application of the tax regime for micro-enterprises will be banned.

The companies involved in timber industry, conducting supporting activities in forestry and extractive industry, producing tobacco products, by-products of coke and petroleum, pharmaceutical substances and preparations, metal, employed in the construction industry - construction of buildings and utilities, demolition of buildings, preparation of construction sites, installation of electrical installations and pipelines and in similar industries will not be able to pay a micro-enterprise tax and register as a micro-enterprise taxpayer.

Also, the preferential tax regime will be forbidden to use in areas related to the final cycle of construction works.

Also, the lists includes such industries as retail, taxi services, air transport, telecommunications, computer programming, information services, financial services, insurance, except the work of insurance agents and brokers, purchase and sale of your own property, legal and accounting services, consulting in the field of business and management.

The regime will not be able to use the companies providing architectural and engineering and technical, advertising, science and technology services, the exception is photo, translation services; agency of personnel search and selection, bodyguards engaged in administrative work of offices in administration and security, health, social care and the hospitality industry, engaged in social, political and other activities; conducting scientific work and preparing market research.

In addition, paying of a micro-enterprise tax will be banned in manufacturing of metal special ties, tools, vehicles, trailers and semi-trailers, etc.

It was earlier said in the Latvian Chamber of Commerce that a list of prohibited areas where it is forbidden to use a micro-enterprise tax prepared by the Ministry of Finance is absurd and does not achieve the purpose of ordering the business environment.

“Latraps” Invested in the Facilities of Primary Processing of Grain

Cooperative society of agricultural services Latraps invested about 5 million euro in the facilities of primary processing of grain, informed BNS CEO of Latraps Edgar Ruzha.

According to his words, investments are made in primary processing facilities in Bauska, Eleja, Jaunpagaste and Aizkraukle.

All of these facilities received the grain and started to work in this season. Construction of the complex in Aizkraukle was planned to be completed by the beginning of July, but it started to work later and now it is working in testing mode due to amendments in Construction Law.

Latraps was established in 20000. It is the largest cooperative of cultivation of grain and rape in Latvia.

The turnover of Latraps amounted to 166.988 million euro - 18.1% less than in the previous fiscal year, the profit has decreased by 2.6 times - up to 2.022 million euro, as showed by the financial report in the Lursoft database in the fiscal year (which lasted from July 1, 2013 to June 30, 2014).

The Latvian Pig-Breeders Have Lost 8.1 Million Euro

The damage caused by African swine fever (ASF) to the Latvian pig-breeders has reached 8.1 million euro, reported a representative of the Ministry of Agriculture Kaspars Funts to BNS.

“Since ASF was found out, the purchase price of pork felt by 15% per year, creating financial problems for the Latvian pig-breeders. Now the loss of pig-breeders has reached 8.1 million euro. Significantly increased the number of farms, which were affected by market constraints (constraints are now set for 40% of pigs registered in Latvia) and which have to reduce production volumes or stop production”, told Funts.

He said that the Minister of Agriculture Janis Duklavs will report that despite the measures taken the ASF continues spreading in Latvia at an extraordinary meeting of the Council of Ministers of Agriculture and Fisheries of the EU on September 7.

It is assumed that Duklavs will report on the complex situation in Latvia also to the EU Commissioner for Health and Food Safety Vytenis Andriukaitis.

It has been already reported that the ministers of agriculture of Latvia, Estonia, Lithuania and Poland sent a letter to the European Commission with a request to increase funding for the fight against ASF.

ASF is very dangerous and easily transmitted viral disease of pigs. It is necessary to stick the herd in areas, where the disease is found out. Therefore, outbreaks of the disease cause great economic damage to pig-breeders. ASF is not dangerous for people.

45.800 Micro-enterprises are Registered in Latvia

45.815 micro-enterprise taxpayers were registered in early September according to the State Revenue Service (SRS).

66.919 of taxpayers have submitted an application to receive the status of the micro-enterprise taxpayer from September 1, 2010 (the date of the introduction of this tax) to September 1, 2015. 64.458 applications were approved, but 1641 have been rejected, 88 have not yet considered. 732 applications are no longer relevant (due to incorrectly entered data, due to the fact that the applicants changed their minds or if the SRS initially decided to give the status, but later cancelled its decision).

36.163 of applications are submitted in the SRS, but 30.756 in the Register of Enterprises to receive the status of the micro-enterprise taxpayer.

According to the SRS, 18.602 enterprises were deprived of the status of the micro-enterprise taxpayer due to failure to comply with the requirements of the criteria defined by law.

A micro-enterprise tax in the amount of 9% of the turnover was introduced on September 1, 2010. According to the decision of the Saeima, the tax rate of 9% applies to the first three years of the economic activity of those micro-enterprises whose annual turnover is from 7000.01 to 100.000 EUR starting from this year. The rate for these enterprises will be 12% of the turnover starting from the fourth year.

The micro-enterprise taxpayer can be an individual businessman, individual enterprise, peasant or fishing farm, as well as other physical person registered in the State Revenue Service as a person conducting economic activity or a limited liability company (LLC) that meets a number of criteria - employees of the micro-enterprises can only be physical persons while workers of LLC are also members of the board. Turnover of a micro-enterprise may not exceed 100.000 EUR in a calendar year; it may employ not more than five people.

Central Market Will Cooperate with the SRS

The State Revenue Service (SRS) and Riga municipal enterprise “Riga Central Market” agreed to cooperate in order to reduce the number of illegal displays on the market, informed in the Department of Public Relations of the State Revenue Service to BNS.

Leadership of the SRS met with the administration of “Riga Central Market” on August 20 to discuss a significant number of violations related to the use of cash-registers, trade of agricultural produce, as well as in other areas.

Exchange of information, surveillance measures taken by the State Revenue Service and the Market, found violations and measurements of control were discussed at the meeting. Leadership of the SRS and “Riga Central Market” agreed on the need of joint activities with the aim of reducing tax evasion in full, promoting fair competition of traders and protection of consumer rights.

“We concluded that despite of our regular supervision and control measures, a large number of merchants, unfortunately, are continuing not to comply with regulations and do not pay taxes in full at the territory of Riga Central Market, causing losses to the budgets of both the government and state. We acknowledge that it will take time and serious joint work, but the interest shown by leadership of “Riga Central Market” and willingness to cooperate gives confidence that the situation can be changed and improved gradually”, said the General Director of the SRS Inara Petersone.

Petersone and Chairman of the Board of “Riga Central Market” Anatoly Abramov agreed to consider the possibility to conclude an agreement on the improvement and expansion of cooperation.

Riga Central Market acts as a joint stock company of Riga City Council since 1995. It includes Riga Central Market, Agenskalns Market and Vidzemes Market.

SEB Banka Actively Financed Agriculture

The slowing pace of development of the Latvian economics is making businessmen looking for ways to optimize their costs and be very cautious with new investments. In the first half a year SEB bank issued 208 million euro in loans, 87% of whom were given to entrepreneurs. However, in general SEB banka is ready to allocate up to 750 million euro this year for crediting of enterprises and individuals.

In the first half of a year, SEB banka has provided financing to enterprises in the amount of 180 million euro. 105 million of them were allocated to large companies, the remaining 75 – to small and medium-sized enterprises. The funds are mainly invested in production development and implementation of investment projects.

Member of the Board of SEB banka Ints Krasts: “Small and medium-sized enterprises are more focused on the local market, so their survival and development opportunities depend both on the domestic demand and the growth of economics of the country in general. This year, according to forecasts of SEB banka, the GDP growth will be at 2.4% or even lower. Purchasing power is growing, but more slowly than last year. Slowing of pace of development of economics makes employers wary: forces to optimize costs and carefully plan any investments. 180 million euro issued as loans in the first half of a year, in our opinion, is very little. In general, we are ready to provide up to 750 million euro this year. These funds can be used to reach the goals of both entrepreneurs and individuals. We are very pleased with the high activity in the field of agriculture. We expect that the representatives of other sectors will become active when the program of a new planning period of means of European structural funds will be approved”.

Due to the availability of European structural funds, most actively are borrowing entrepreneurs working in agriculture this year. They account for about 30% of SEB banka loans issued in the first half of a year. The amount of financing provided is almost 40 million euro. The funds are mostly used for the purchase of land and equipment, as well as the development of production.

Local governments actively are taking loans, which may still use the means of the EU funds of the previous planning period. Financing granted in the first half of a year in the amount of nearly 2.5 million euro is aimed for infrastructure projects.

Approximately one third of funding allocated by SEB banka in the first half of a year was received by enterprises working in the service sector. The remaining funds are provided to the manufacturers. The largest amount received by companies working in the field of high technologies and telecommunications, as well as representatives of the chemical industry.

The Volume of Latvian Export and Import is the Lowest One in the Baltic States

The volume of export and import of Latvia was the lowest among the Baltic States in the first five months of 2015, but the highest deficit of balance of foreign trade was in Lithuania, reported the Central Statistical Bureau.

Latvia sent the export goods for 4.154 billion euro, Lithuania - for 9.029 billion euro, Estonia - for 4.828 billion euro in the first five months of 2015.

75% of Latvia's export is for the other EU countries including, 63% of the Lithuanian and 75% of the Estonian one.

Export of Latvian goods to Lithuania amounted to 18% of total export, to Estonia - 12% in the first five months of 2015. Lithuania exported to Latvia 10%, to Estonia - 5% of total export; Estonia exported to Latvia 10%, to Lithuania - 5% of total export.

In its turn, the value of goods imported in Latvia for the first five months of 2015 amounted to 5.006 billion euro, in Lithuania - 10.308 billion euro, in Estonia - 5.334 billion euro.

Goods imported from the other EU countries composed 79% of the total value of import in Latvia and 66% in Lithuania, 81% in Estonia.

Import to Latvia from Lithuania amounted to 17%, from Estonia - 8% of total import. Lithuania imported from Latvia 7%, from Estonia - 3% of total import, Estonia imported from Latvia 9%, from Lithuania - 9% of total import.

All three countries have a negative balance of foreign trade in the first five months of 2015. The deficit of balance of foreign trade of Latvia was 852.6 million euro, Lithuania - 1.278 billion euro, Estonia - 506 million euro.

Čili Pica Suffers Losses

Turnover of the company Čilija Pizza, operating a network of fast-food restaurants Čili Pica, amounted to 7.82 million euro in 2014, which is 12.3% less than in 2013, losses have increased for several times and reached 466.8 thousand euro, as presented by a financial report of the company in the database Lursoft.

Revenues of Čilija Pizza from sales of the production fell by 13.5% last year, amounting to 7.02 million euro, while revenues from the product home delivery increased by 0.3%, to 799.500 euro.

Information of the leadership states that Čilija Pizza completed 2014 with losses due to the reduction of the flow of tourists in Latvia, as well as due to the increased competition in the business of public catering.

Also, the leadership indicates that Čilija Pizza continued to develop a network of restaurants Čili Pica in 2014, carrying out renovation and interior changes in a number of them. 655 thousand euro in the whole are invested in the renovation and new design of leased restaurants. In addition, two unprofitable restaurants Čili Pica were closed last year.

In 2015, the company is planning to develop a network of restaurants Čili Pica, opening new ones and updating the interior of existing ones.

Turnover of Čilija Pizza amounted to 8.914 million euro, losses – 39.9 thousand euro in 2013.

Share capital of Čilija Pizza is 2.8 thousand euro. The sole owner of the company is Lithuanian Čili Holdings, according to the data of Lursoft.

Latvian Cheese Producers Have Launched Export to the West

The crisis in the industry and record low purchase prices for milk have not prevented the Latvian cheese producers to find new markets instead of the Russian ones and start production of new products, says the News Service of TV5 channel.

Nearly 3000 tons of cheese was exported to Russia during the first 5 months of last year, when the embargo had not yet touched the Latvian exporters of dairy products. This year, the exporters sent almost the same amount of cheese to new markets in Germany, the Netherlands, Italy, Sweden and Morocco. “We need to find new markets or launch new products. It is necessary to replace the lost markets. We, for example, had not produced mozzarella cheese before, but we had to do it to avoid overproduction of Dutch or Russian cheese. So we launched a new product line – Mozzarella, Maasdam and we also have already started tasting of fresh cheese in retail chains throughout Latvia”, said Deputy Chair of Council of Smiltenes Piens Gita Murnietse.

Latvian cheese producers almost completely replaced the Russian market by European in general, but farmers are now working at their best not to lose income because of falling of purchase prices for milk. “The volume of purchases of milk fell by only 1%. Everyone knows how much farmers get for 1 litres; the purchase price has fallen by 34%. Now they receive 22 cents per litre on average”, explained the head of Siera Klubs Wanda Davidanova.

Farmers have aligned falling of prices by increase in milk yield despite such a sharp drop in purchase prices for milk. “Despite the price reduction, dairy products are produced for 50% more in Latvia than they are bought here. So, the reduction in prices will not help - you will not eat 5 kg of cheese, if before you ate only 1 kg”, pointed out Murnietse to TV5.

Production of cheese and cottage cheese increased by 34% in the first 5 months of this year compared with the same period last year. Export of these products also showed a little, but still growth of 1%. Each Latvian eats more than 18 kilograms of cheese per year; every third ton of produced cheese is exported.

Latvian Pasazieru Vilciens Plans to purchase New Electric Trains

Latvian carrier of passengers by rail Pasazieru Vilciens (PV) is planning to begin a new procedure of procurement of electric trains in the near future, which can be delivered at the end of next year at best, said the board chairman of PV Andris Lubans in an interview to the Latvian TV broadcast “Morning Panorama” on Wednesday.

He said that the strategy of the company in the years 2015-2020, which will be presented on Wednesday, is a prerequisite for the start of the procedure.

„Because of this there is already a more stable foundation for us to attract credit resources. Taking into account that cohesive funding of procurement of trains by the EU is no longer possible, we will have to borrow the money on the market. We must be able to prove the commercial banks that we have a strategy, that our business is viable for decades, that we will be able to collect enough funds to be able to pay for these trains”, said Lubans.

It had been already reported that the winner in the tender declared by PV for the lease of the new trains was admitted the Swiss company Stadler Bussnang, but PV stopped the procedure of procurement of trains on July 23, last year.

Purchase of PV provided rent of 25 electric trains for 15 years with the possibility of increasing the number of trains to 45 with a subsequent redemption. The total contract price is 273.904 euro.

However, the contract was not concluded as Minister of Transport Anrijs Matiss dismissed the board of PV, which has failed to prove that the company can afford to rent the new trains.

PV was founded in 2001 by separating the inner railway passenger services from the state-owned railway company Latvijas Dzelzceļš. Previously PV was a subsidiary of Latvijas Dzelzcels (100%), but PV was transformed into a state-owned enterprise in October 2008.

Luxury Housing Prices in Jurmala Dropped Significantly in This Season

This season, luxury housing rent in Jurmala costs a half times cheaper than last year, shows a market overview prepared by the company “Balsts”.

If the house in good condition and in good location can be rented for 5000 euro a month last year, then is it a half of that price this year.

At the same time, the company's experts note that in the segment of cheaper housing rent substantial reduction in prices has not occurred for apartments in the serial houses and individual rooms in host apartments.

Expert: Smart Technologies Come into the Restaurant Business

Latvian restaurants have to become more flexible and open to different technologies that can help them improve the quality of service and competitiveness, says the expert on restaurant business Elena Kashina.

According to her opinion, in such a small market as Latvia, where there are hundreds of restaurants for several thousand gourmets, the primary goal of technology is to improve the efficiency and improve the service, but the next step is to attract customers.

“As in any hospitality business, it is important not to only get the customer, but also be able to provide services to him so that he would return”, added Kashina.

This trend confirms the week of Riga restaurants that took place just now, conducting the experiment of a table reservation online. For example, it increased the number of visitors for 9% in the restaurant “Aqua Luna”, compared to the other restaurant weeks.

Kashina rates it as an excellent result; particularly noting that general system of table reservation is an effective way to meet the expectations of visitors without significant investments for some restaurants, i.e. restaurants, as well as other enterprises will also use various smart technologies.

We must reckon on the fact that more and more tourists want to book not only accommodation, various tickets, but also tables in restaurants. Entrepreneurs need to think about how to provide the most quality: whether to process manually reservations received by e-mail or join one of the automatic or semi-automatic reservation systems.

In the world of online table reservation another trend is involved - small fee will be charged for the reservation covering the costs of a restaurant if people do not come without warning about it an advance. “I think that almost every restaurant has faced a similar situation in Latvia. The question, of course, is does the Latvian consumer is ready for it”, said Kashina.

“Many people will say that the Latvian restaurants cannot afford to invest in a variety of technological solutions, however, I propose looking at the long-term prospective. Sometimes investing in a high quality POS-system that can be integrated with customer management system, can be compensated by strengthening the customer loyalty”, explains Kashina.

“It is a challenge to master new technologies, which include not only implementing and use of them, but also not to lose personal communication with the client at this time. The hospitality business cannot exist without it, especially high-end restaurants”, summarizes Kashina.

Elena Kashina is an expert on restaurant business with nearly 15 years of experience in the industry both in Latvian and international level. Now she is one of the owners of the restaurant “Aqua Luna” and rotisserie “Doma Dārzs”. Also, she manages a beach restaurant in Jurmala called “Legend. Beach”.

„Laima” Will Invest 700.000 Euro in the Production

The largest manufacturer of sweets in Latvia “Laima” plans to invest 700.000 euro in the improvement of working conditions and production processes at the factory located on Miera Street in Riga, as it was reported by representatives of the enterprise to BNS.

A large-scale investment program is carried out within the enterprise to improve the conditions of workers and the general improvement and renewal of the production process, during which 700 thousand euro will be invested in the factory located on Miera Street. The investment project is scheduled to finish in August 2015.

As NP Foods board chairman Erik Smith-Hansen said, the investment program is planned to strengthen the competitiveness of “Laima” and improve the everyday life of its employees, while preserving the maximal historical value of the factory. “There have not been made investments in the production of “Laima” in the last 15 years and we also will continue to implement improvements in the production lines in the near future”, he said.

It is planned to build a new canteen, new restrooms, additional dressing rooms for the workers of the factory, renew toilets and showers under this program. Along with this, the company is working on to improve an internal turnover of products and raw materials within storage process. It is also planned to convert the building entrances in the framework of this program.

As previously reported, the turnover of “Laima” amounted to 10.842 million euro, profit - 5.75 million euro in 2013.

“Laima” is a part of “NP Foods”, Norwegian-owned food concern “Orkla”. Now “Laima” exports its products to more than 30 countries in the world.

Foreigners Put Their Business to Latvia

491 companies in Latvia are registered for native of Estonia. Increasingly, businessmen of this Baltic country decide to move to Latvia due to more flexible tax system of our country. However, Estonians are not the only as reported by the program “Tonight” of LTV7.

Milanese Riccardo Kapuzzo first came to Riga for almost three years ago as a tourist. So he came to Latvia until the moment he has not moved his business to the Latvian capital on February of this year.

“You have less bureaucracy than in Italy. Taxes are lower, but educational level is higher. Riga is a beautiful city. Your food is delicious. I have gained a few kilos!”, admits Kapuzzo to LTV7. In the portfolio is my own business related to the objects of design and the Internet, an office in the city centre, a team of seven people.

No matter how many foreign companies are registered in Latvia, the fact that taxes are received in the Latvian treasury is important. More often neighbours come to Latvia. Businessmen from Estonia run away. The Association of Small and Medium Enterprises (EVEA) of the Baltic republic is not surprised.

“Estonia's tax system needs to be improved. It seems interesting, for example, your micro-enterprise tax”, said the head of EVEA Raivo Altmets in a conversation with LTV7.

Estonia is settled comfortably in the list of investors in seventh place in the Lursoft database. Lithuania is in the sixth one. The accumulated direct investments of Latvia are almost 12 and a half billion euro in just the first quarter of 2015. This is half of the gross domestic product of the country. That is what produces Latvia per year.

New works places and new culture come together with foreign money. So says the head of the Investment Agency of Latvia Andris Ozols.

“Some of the taxes are the lowest in the EU, what we boast of. But the tax levied on wages is one of the highest. It is clear that this has a negative impact on our competitiveness with Estonians and Lithuanians. The presence of foreign companies from different countries is welcome. However, there are exceptions, for example, investments aimed at narrowing the competition. Scandinavians, for instance, bought a sugar factory that was closed from us”, reminds Ozols.

As follows, Latvia has not yet became an investment haven, but a flow of investments is not as high as we would like.

“If all the foreigners would invest like that, our economy would grow significantly. The biggest problem of our tax system is pulling of it all the time. In the morning somebody woke up and thought: Oh, come on, raise the tax, let's change it!”, says President of Latvian Chamber of Commerce and Industry Aigars Rostovskis.

Losses of Latvian Fishermen Amount to 100-200 Million Euro Because of a Ban on Export to Russia

Losses of the Latvian fishermen amount to 100-200 million euro as a result of Russia's decision to ban the import of canned fish from Latvia, said the Minister of Agriculture Janis Duklavs on Wednesday in an interview to the broadcast of the television channel LNT “900 Seconds”.

Now the working group is specifying the amount of losses. “This question cannot be answered in one sentence, as the working group in working on it, trying to calculate losses. Entire fishing industry because of the ban will not stop ... The losses could reach from 100 to 200 million euro – those are estimations of the industry, of individual representatives of it. We would like to study this issue more precisely and only then to say what these numbers are”, he said.

Duklavs reminded that Russia imposed the ban for two months. “Food and Veterinary Service (FVS) together with representatives of the industry shall study during this time the reason of problems, whether standards for levels of benzopyrene are exceeded, issues of sterilization and traceability. Russian experts pointed out that it is impossible to trace how fish from the ship gets into a can and further on the table of a buyer. These questions need to be answered and Russia's decision will follow two months later”, he explained.

The Latvian side expressed its dissatisfaction with the Russian colleagues, as only four fish-processing plants were verified, but the ban to export products to Russia refers to the whole industry, the minister added.

As previously reported, Rosselkhoznadzor banned the supply of fish and fish products from Estonia and Latvia on June 4. The Latvian fish manufacturers said that it is a heavy assault for them; a number of enterprises may go bankrupt.

Russia Bans Import of Fishery Products from Latvia and Estonia

Russia bans import of fishery products from Estonia and Latvia. TASS is reporting about it referring to the press-secretary of Rosselkhoznadzor Julia Trofimova. Such a statement was made by her after consultations of authorities with the veterinary services of the Baltic States.

“Rosselkhoznadzor informed the veterinary services of Latvia and Estonia about the concern related to the nature of identified systemic violations and told them that it will be suspended deliveries of fishery products from Latvia and Estonia to the territory of Russia in the near future”, said Trofimova.

Previously, the Kaliningrad customs officers prevented smuggling of about four hundred kilograms of meat and milk from Poland. Three women tried to smuggle the banned products by cars in Russia.

Latvenergo Will Issue Seven-Year Bonds for 50 Million Euro

The energy company “Latvenergo” will release seven-year bonds foe the amount of 50 million euro on June 10, says the report of the company Exchange Nasdaq Riga.

This emission will be the first part of the second issuance program “Latvenergo” for 100 million euro.

The maturity of the new bonds is June 10, 2022. Nominal value of one bond is 1000 euro, minimum amount of investments - 100 000 euro. These securities are provided to include in exchange listing of debt securities.

As it was already reported, “Latvenergo” will release “green” bonds this year. Proceeds from the emission of “green” bonds will be invested in the implementation of environment-friendly projects.

The list of debt securities of the exchanges Nasdaq includes bonds of “Latvenergo” for total amount of 105 million euro since 2013, including five-year bonds for 70 million euro and seven-year bonds for 35 million euro.

The audited turnover of “Latvenergo” was 1.011 billion euro in 2014 that is for 8.1% less than in 2013, while profit declined by 35.4% - up to 29.79 million euro.

Transfer of Share Capital to the Euro can be Made Automatically by the Sole Ltd.

The Saeima of Latvia approved amendments to the Commercial Law in the second and final reading, providing the automatic transfer of share capital belonging to one owner of a limited liability company (Ltd.) to the euro.

Now the institution, which is in charge of registration of the enterprises - the Register of Enterprises will be able to solve the problem of automatic transfer of share capital owned by a single owner of Ltd. to euro.

According to the information of the Register of Enterprises, only 16% of such companies applied for its share capital`s transfer to the euro to date. Meanwhile, Ltd. owned by the sole owner is 80% of the companies in Latvia.

The amendments will enter into force on the day after the proclamation of the President of Latvia.

Experts: the Shadow Economy in Latvia is Almost Twice the Rate of Lithuania and Estonia

The volume of the shadow economy in Latvia, unfortunately, does not decrease, its share amounted to about 24% of GDP last year, almost twice exceeding the rates of Lithuania and Estonia, said Director of the Centre for Sustainable Business Arnis Sauka on Wednesday in an interview to the program “900 Seconds” of a television channel LNT.

“Unfortunately, the share of shadow economy in Latvia does not decrease. Its share has decreased in comparison with 2013 in Lithuania and Estonia in 2014. This means that the gap is widening. If two or three years ago it seemed that the shadow economy in Latvia, Lithuania and Estonia closes together, now the gap is expanding and we can say that the shadow economy is almost twice as much as in neighboring countries in Latvia”, he said.

Sauka noted that the share of shadow economy in Latvia has remained approximately at the level of 2013 last year. “The news, of course, bad. The fight against the shadow economy is priority of the government and we, the scientists, had expected that its share will decrease”, he said.

He added that although the level of the shadow economy has not changed, changed its structure. “A lot is said about the salaries in envelopes as the biggest problem of the shadow economy. But according to our research, the much larger problem is hiding of income as the payment of salaries in envelopes decreased significantly. This is the field, which we ask to pay more attention”, said Sauka.

He added that the shadow economy is becoming bigger problem in construction; its share in this sector is 50%. The share of the shadow economy is growing in the field of retail sales as well. Traditionally the share of the shadow economy is greater in Riga and Kurzeme than in other regions of Latvia.

Representatives of the SSE Riga is going to carry out a presentation of the latest studies of the shadow economy in the Baltic States on Wednesday.

The share of shadow economy in Latvia increased by 2.7 percentage points in 2013, making 23.8% of GDP as already reported by BNS, according to the previously completed research of SSE Riga. According to studies, the highest point of the Latvian shadow economy was reached in 2010 - 38.1%, while the lowest proportion of it was in 2012 - 21.1%.

The Number of Passengers Served by the Port of Riga Decreased by 40.3%

The Port of Riga served 133.035 passengers in the first four months of 2015, as it is for 40.3% less than in the same period of 2014, according to information of the port.

The Port of Riga has not served a single passenger of cruise ships in the first four months of this year, while the port served 3.042 passengers of cruise ships in the same period in 2014. Accordingly to the information available on the port`s website, the first cruise ships are expected in Riga in May.

The Port of Riga served 222.917 passengers in the first four months of 2014, for the entire tear of 2014 – 737.865 passengers, which is for 11.9% less than in 2013.

Regular passenger ferry traffic from the Freeport of Riga is carried out only to Stockholm.

Survey. The Main Criteria for the Latvians When Choosing a Profession

The most important criterion when choosing from several job offers to residents of Latvia is the amount of the salary, showed a recent study of “DNB Latvian Barometer”, told the Head of PR unit of DNB Banka Teika Lapsa.

Answering the question “If you had to choose between several job offers, what would be the three main criteria that would determine your choice?”, 84% of respondents mentioned higher salary, 44% - the presence of social allowances, 30% - the presence of various awards and bonuses, 27% - compliance with their duties and their specialty knowledge, 6% - the opportunity to acquire new knowledge, 5% - the opportunity to work in an international environment.

As compared to the survey conducted in 2012, respondents most often pointed to criteria such as higher wages, the presence of social allowances and premiums and less - convenient location of a working place, more flexible working conditions, interesting and fascinating job and the possibility of receiving new knowledge in 2015.

Answering the question, what in their understanding is good work and by what criteria it is characterized, 85% of respondents mentioned the high salary, 47% - good working conditions, 37% - an interesting job. In comparison with 2010 and 2012, respondents more often mentioned high wages and good working conditions this year.

The value of wages dominates in responses to the question what offer the respondents would accept, if they had to choose between qualified job with a lower wage and low-skilled jobs with higher wages - 51% of respondents would choose the second option, 31% - the first. In 2010, the first option would have preferred by 24%, in 2012 - 24% of respondents.

The average amount of income mentioned by the respondents for one family member per month needed to survive would be 625.64 euro. 21% of respondents named the sum of 500 euro, 24% - the amount exceeding the average salary in Latvia, 15% - the amount of up to 300 euro.

The average amount of income mentioned by the respondents was 475.84 euro in 2010, 517.23 euro in 2012.

When it was asked to describe the level of labour safety in Latvia in general, 51% of respondents mentioned it as bad, 31% - good. At the same time 42% of respondents believe that it has not changed over the past five years, 21% - improved, 14% - has worsened.

Answering the question about what to potentially hazardous conditions are faced by respondents at work, 27% mentioned the need to work in the same position, 26% - long working hours, 24% - work at the computer, 21% - great physical activity, 20% - drafts, 19% - great mental workload, 19% - the need to perform work duties in their spare time.

Answering the question, whether they had health problems in the past five years due to work, 47% responded negatively and 34% answered affirmatively mentioning back pain, pain of hands, feet, and so on. Visual impairment was mentioned by 17% of the respondents.

Social research “DNB Latvian Barometer” is conducted monthly.

Latvian Residence Permit is Losing Popularity

The first months of 2015 showed a sharp decline in demand for Latvian residence permit. At the same time sales of houses and apartments had decreased, but economists predict a decline in real estate prices.

Increasing the input threshold for obtaining a residence permit and weakening of the rouble led to the demand for a residence permit fell by about four times. The program for attracting investment has been operating in Latvia since 2010: it is possible to obtain a residence permit under the simplified scheme by investing in the local economy. During this time, Latvia has attracted 1.3 billion euro of investment, 16.000 investors were granted a residence permit; 11 thousand of them are Russians.

Latvian politicians started talking about the program should be suspended against a background of the Ukrainian crisis and a sharp deterioration in relations between the West and Russia, as it promotes the influx of Russian citizens in the country. The main argument of the proponents of this idea lies in the fact that Russia annexed the Crimea, referring to the need to protect the rights of fellow citizens. Opponents of this argument talked about the economic advantages of the program: foreigners buy real estate (as a rule, investments particularly went into this area), pay taxes, bring here their families; stimulate the service sector. As a result, the Latvian deputies agreed on a compromise: the program is not shut down, but the minimum value of the property, on the basis of which it was possible to request a residence permit, was raised from 142 thousand up to 250 thousand euro.

Residence permit in Latvia: Expensive and Unattractive?

“I think the majority of politicians had the understanding that it will be assault to the Latvian economy. But it was considered that this assault will not be so painful, because there were not any Russian [counter] sanctions or other negative economic effects”, says a consistent opponent of tightening, the ex-Minister of Economy of Latvia Vyacheslav Dombrowski. – “Unfortunately, decisions are often made not on the basis of pragmatic economic considerations”.

Amendments to raise the ceilings came into force in September, 2014. Three months after it Latvian officials continued to receive applications from applicants for residence permits: you can submit documents within few months after the conclusion of a transaction.

The control three months have expired by the beginning of 2015 and it turned out that the interest of foreigners has greatly reduced.

The Office of Citizenship and Migration Affairs of Latvia (OCMA) has received 60 applications (a few people can apply in one application for a residence permit, for example, members of one family, who bought an apartment) in January, 2015.

For comparison, these applications were 242 in January, 2014; 39 applications (against 157 a year earlier) in February, 2015, in March, 2015 - 35 (180 a year earlier).

Assault to the Market in Riga and Jurmala

The first sounded the alarm brokers, as most of the investment was precisely in real estate. Latvian Real Estate Association Lanida stated that the number of requests for a residence permit in exchange for investments in real estate was reduced by 90% since the entry into force of the new rules.

As it was estimated by Association, the state has received for 9 million euro less of only in the form of direct taxes due to this fact. According to the Executive Director of the Association Irina Syarki, Russians now almost do not buy anything in Latvia.

“Here is at once a number of factors: first, the ban on the entry of certain cultural figures, prompting a backlash, then a discussion of a complete stop of the program, then raising of the thresholds and the introduction of the state fee in the amount of 5%, then the depreciation of the rouble. This is how things stack up”, says the director of the Association Lanida.

In total, according to the Land Registry of Latvia, the number of transactions in Riga and Jurmala was reduced by one and a half, as the main flow of investments from residents of the CIS was directed exactly in these cities.

In January 2015, 874 objects were purchased in Riga, while in the previous year - 1119. The peak activity occurred in August of last year, that is, the day before the entry into force of the new ceilings, while in the Latvian capital were concluded 1506 transactions. The situation is similar in Jurmala: 92 objects were purchased in January, 2015, a year earlier – 125; in August 2014 – 312 objects (an absolute record since 1993).

Standard Set

In addition, according to Irina Syarki, it is not so easy to find apartments in Riga that match the new conditions for obtaining residence permits.

“The property worth more than 250 thousand euro is enough, but there are restrictions on the cadastral value. [The cost of property determined by the state. Real estate tax is figured out from this amount – editor notes]. It must be not less than 80 thousand euro and these objects are very few, says Irina Syarka. - Now [a party “The National Union”] proposes to raise the threshold to 100 thousand euro. We decided to find out how many objects with cadastral value of more than 100 thousand euro we have: turned out to be less than 1% and this also includes, for example, the building of the Saeima and the government building”.

In Jurmala, the percentage of such buildings is higher, but increase of ceilings was not as important as the general deterioration of the geopolitical situation for the exclusive resort real estate.

“If you analyze a Russian buyer, so an important role plays fashion, says the Member of the Board of Jurmala Real Estate Igor Danilevich to BBC Russian Service. “There were opportunities, money, a friend bought - why should not I buy? My company is engaged in mainly Jurmala real estate, there popular sites were always worth more than 250 thousand euro. It is about real estate in new buildings on the sea side, where the cost per square meter starts from 3000 euro. However, this trend has ended”.

And again the usual set is repeated: problems with Ukraine, falling of the rouble, sanctions. “A major role was played by changes in the legislation of Latvia and some orders in Russia itself. Many, say officials, were forbidden to buy property abroad”, concludes Danilevich.

The Large-Scale Crisis Will not be

However, large-scale crisis in the market is not expected in the Latvian realtor circles and a fall in prices is not also predicted. However, everyone understands that the trouble cannot be avoided. Ex-Minister of Economy of Latvia Vyacheslav Dombrowski is more pessimistic with his forecasts; he believes that the real estate market is “waiting for depression”.

“At some point the builders were told that they have the opportunity to build housing, which can then be sold to Russians or residents of the CIS with a certain purchasing power”, says Dombrowski to BBC Russian Service. “There was a certain confidence from the builders; they began to build houses. Now they built them, but cannot sell”.

According to the Ex-Minister, developers will probably have to cut prices to sell this property to a different category of buyers. “Probably, it will be required to cut the prices quite a lot”, concludes Vyacheslav Dombrowski.

The Most Demanded Professions in Latvia

Drivers, cooks and sewers are most in lack in the labor market of Latvia, said the Director of the State Employment Agency (NVA) Inese Kalvāne on Thursday in an interview to the Latvian TV “Morning Panorama”.

“These professions are in demand in all regions of Latvia and in the centers of economic development”, she said.

Kalvane pointed out that the centers of economic development also require specialists of the manufacturing industry, programmers, repairers; while in rural areas - woodworkers and agricultural specialists.

She reported that 30% of the 85.000 jobless persons registered in NVA are out of work for a long time. “This means that skills and qualification of at least of a third of the unemployed do not meet the requirements of employers”, explained Kalvane.

“Liepājas naftas tranzīts” Changed Its Name

Latvian railway freight forwarder Liepajas naftas tranzits (LNT), 50% of shares of the capital were acquired by a subsidiary of logistics “Russian Railways” (RZD) - “RZD Logistics”, changed its name to Euro Rail Cargo according to information of a database Lursoft.

The name change was registered in the Commercial Register on Friday, April 10.

As previously reported, the Russian JSC “RZD Logistics” (RZDL) has acquired 50% of an authorized capital of the Latvian railway carrier LNT.

“The new project gives “RZD Logistics” the ability to provide stability and rhythm of the passage of goods in transit to Europe”, informs the company.

As the CEO of RZDL Pavel Sokolov said, “entry into the capital of the Latvian carrier aimed at the further implementation of our strategy of entering the European market of multimodal transportation of goods”.

“RZD Logistics” was established as a 100% subsidiary of RZD in 2010 under the development of logistics direction of a railway holding. The company provides service “door to door” (performing railway, road and sea transportation, warehousing, terminal handling, customs clearance and insurance) due to their integration within the group of RZD in a single chain. Last autumn 100% of the shares of RZDL were transferred to JSC “United Transportation and Logistics Company” (OTLK), which is created by the railways of Russia, Belarus and Kazakhstan for container transit of goods between Europe and Asia. RZD now owns 99.84% of the shares in OTLK, the state organization "Belarusian Railways" and JSC “National Company Kazakhstan Temir Zholy” 0.08%.

The LNT turnover amounted to 63.7 thousand euro, but losses - 5.6 thousand euro in 2013.

RZDL owns 50% of shares of Euro Rail Cargo through the Dutch RZDL Multimodal, the remaining 50% ones are owned by Latvian company Locomotive Traction Operator.

The Most Desirable Employers of Latvia

The most desirable employer was the company of energy supply “Latvenergo” in 2014 in Latvia, as showed the research conducted by the recruitment company “WorkingDay Latvia”.

Latvenergo was declared to be the most desirable employer for the third year in a row. The second and third places in this list are taken by the company of e-services “Lattelecom” and “Latvijas Mobilais Telefons” (LMT).

The top ten of the most desirable employers also includes “Swedbank”, “Latvijas Valsts meži’, “Statoil Fuel & Retail Latvia”, “airBaltic”, “Latvijas Gāze”, “Latvijas Banka” and “Latvijas Dzelzceļš”.

As the Marketing Director of “WorkingDay Latvia” Maris Silinieks noted, after the economic crisis in Latvia reputation of employers in the labor market was estimated changeable, because they had to make unpopular decisions, such as reducing the number of employees, salary review. “Now the reputation of employers stabilizes every year. The most important changes are taking place, if the company purposefully improves its image and communicates with employees. A good example is the company “Draugiem Group” (draugiem.lv), which moved to a comfortable modern office in 2011 and reported about it and other benefits offered to the employees in the mass media. This enabled the company rising in the top of the most desirable employers for 28 positions in 2012. So, it preserves its constant 12th place for the third year in a row. This is a significant achievement at time when the companies of IT industry rigidly compete for top talents”, - he said.

Unfortunately, not all employers are aware of how important is the company's image in the labour market for attracting qualified professionals, added Silinieks. “A bad name of the company cannot be “patched” by large salaries. Once the head of the personnel of one company admitted that the company can afford to pay its employees lower wages than the competitors of it because it has a good reputation in the labour market, so everyone wants to work here. This means that the companies saving funds to improve their image, may be forced to pay higher salaries to attract competitive professionals”, - he said.

Liepkalni Builds Confectionery Production

An Estonian company OÜ Pärnamäed owned by the Latvians demolished an old motel in the village of Reiu near Parnu, a new bakery will be built at this place, employing 60 people, informs the newspaper Pärnu Postimees.

More than 250 people are employed by the company Liepkalni in Latvia.

The plot of real estate near the highway has been staying unkempt for several decades, the old motel, which changed owners for several times, was bought by the Latvians in 2010. The new owners plan to organize confectionery production here.

A building of the old motel was demolished this week. It is planned to build a confectionery production with café and shop.

The total area of the new building will be 900 square meters; construction will led the company YIT Ehitus.

A workshop, shop and cafe Pärnamäged will be ready for next spring. It is assumed that 60 people will work here. Staff of the enterprise already includes 16 people.

Since the demolition of the old motel and designing of a new production took a long time, first Latvians established his first confectionery in Parnu, where the confectionery and café Pärnamäged opened in March, 2011.

“Bank M2M Europe”: the Year has Started Well for the Banks Serving International Customers

This year has started well for the Latvian banks focused on serving international customers, said a Chairman of the Board of “Bank M2M Europe” Robert Idelsons to the agency BNS.

“The year of 2015 has begun interesting, generally positive for the banking sector, especially for the banks focused on serving international customers. The crisis in Russia and Ukraine still contributes to capital outflows from the neighbouring eastern countries. The Latvian banks, of course, are not the main final goal of these flows, but still they benefit from this trend”, he said.

Also, Idelsons noted that the beginning of the program on buying bonds initiated by the European Central Bank contributed to higher prices of stocks and bonds in Europe, which increased the income of banks and their customers; in turn, the rapid growth of the US dollar against the euro is good for the banks, which receive a substantial part of the commission in the US dollars.

“It's difficult to say what will be the year as a whole, as much depends on political decisions both in Europe and Russia in connection with the situation in Ukraine”, admitted Chairman of the Board of “Bank M2M Europe”.

“Hill and Knowlton Strategies” Ceases its Activity in the Baltic States

Enterprises of the agency group of public relations “Hill and Knowlton Strategies” ceases it activity in the Baltic States, their obligations in Latvia are transferred to the newly established company Mezgaile, Malina un Austrins (MM&A), informed BNS the representatives of MM&A.

The company noted that after the decision of the group “Hill and Knowlton Strategies” related to ceasing it presence in the Baltic States, the customers in Latvia will be serviced by the agency of public relations and marketing strategies MM&A, formed by the former management team “Hill and Knowlton Latvia”. MM&A will retain the previous team of Hill and Knowlton Latvia.

MM&A will start its work on April 16 after Hill and Knowlton Latvia will fulfil all obligations to customers.

According to Lursoft, MM&A was entered in the Commercial Register on Friday; the share capital of the company is 2800 euro. The largest owner of the company is Janis Austrinsh with 40% shares of the capital; members of the board of MM&A Egite Malina and Linda Mezhgayle own 30% of shares each.

Hill and Knowlton Latvia was established in 1996, its share capital is 7880 euro. The sole owner of the company is a Dutch company Berkeley Square Holding B.V.

The Government Will Raise the Question of the Sale of State Shares of LMT and Lattelecom

The Latvian government is planning to consider the resumption of the working group of three ministers to assess the possibility of selling the state-owned shares of the capital of telecommunications companies Latvijas Mobilais telefons (LMT) and Lattelecom on March 10.

A draft resolution of the Cabinet of Ministers prepared by the Ministry of Economics provides to reconfirm the working group and determine its costs.

The Ministers of Transport, Economics and Finance will have to negotiate with the Scandinavian concern TeliaSonera related to management of the capital shares of Lattelecom and LMT and development of these companies, including their reorganization, change of participants and other measures to enhance the economic value of enterprises and improve their performance.

The working group on the privatization of state capital shares of Lattelecom and LMT was established on December 30, 2010, but during this time there was a change of ministers.

Co-owners of the oldest Latvian mobile operator LMT are the Latvia State Radio and Television Centre (23%), the electronic communications company Lattelecom (23%), the Republic of Latvia in the face of the Ministry of Transport (5%) and TeliaSonera (49%).

Co-owners of Lattelecom are (51%) the Republic of Latvia and TeliaSonera (49%).

Export of the Latvian Enterprises of Mechanical Engineering and Metalworking Decreased by 19%

In 2014, the Latvian enterprises of mechanical engineering and metalworking exported products for 766.414.000 euro - 19% less than in 2013, was reported by Association of Mechanical Engineering and Metalworking Industries of Latvia to the agency BNS.

The cost of exported finished metals included was 262.890 million euro, which is 5% more than in 2013; electrical equipment - 153 235 000 euro, for 20% less; motor vehicles, sidecars and semi-trailers - 124.1 million euro, for 7% less; equipment and machinery not qualified in other sections – 104.243 million euro, for 6% less; other vehicles – 62.783 million euro, for 31% less; metals – 59.164 million euro, which is for 68% less than in 2013.

In 2013, members of the association exported products for 940.358 million euro, which is for 27% less than in 2012.

These data include the enterprises employing at least 20 employees or turnover of whose is not less than 427 thousand euro.

Association of Mechanical Engineering and Metalworking Industries of Latvia was established in 1997.