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

The ministry explains that, under the Administrative Violations Code, the current administrative fine for violations of accounting procedures is EUR 70 to EUR 430, which may lead taxpayers to believe that misinforming the authorities about wages paid to employees is not a serious violation. The ministry has concluded that the current applicable fines are not enough, and the number of employees who are paid their wages under the table has not decreased significantly, and full taxes are still not declared in many instances.

That is why the ministry has proposed to increase the amount of fine envisaged in the Administrative Violations Code to the amount of fines that apply to tax evasion and similar violations concerning income and profit.

The amendments proposed by the Justice Ministry also stipulate that persons who are found guilty of paying wages under the table could be banned from taking certain positions in a company.

According to the Finance Ministry's data, unreported employment is a problem of a national scale. It affects not only budget revenue, but also distorts competition, as companies where wages are paid under the table gain a competitive edge over honest taxpayers, indicates the Justice Ministry.

The ministry's proposal will now be reviewed by Saeima.