Analytics, Latvia, Law and Regulations, Legislation, Markets and Companies

OECD said in its report that even though citizen satisfaction with public services in Latvia currently lies below the OECD average, trust in government and justice services has increased at a pace above the OECD average.

The stakeholders are also generally satisfied with the services provided by the state bodies involved, namely the Enterprise Registry, the State Land Service and Land Registry offices and the Patent Office. Against this background, stakeholders emphasized two issues for improvement. First, it was felt that courts and public services at times take an unnecessarily strict approach in the application of the Commercial Law. For example, when a matter is not regulated in the Commercial Law, state institutions too quickly assume that this matter is prohibited rather than providing the parties with the freedom to contract. Second, entrepreneurs identified the need to adapt the Commercial Law to modern forms of business and finance, such as start-ups and crowdfunding.

OECD recommends that courts and public services could contribute to an enabling culture through a more facilitative interpretation of the Commercial Law. Selective legislative amendments could support this change by clarifying and facilitating the interpretation of the Commercial Law where courts and public services do not achieve the necessary facilitative solutions.

Aslo, the scope of the Latvian Commercial Law could be expanded so as to include modern forms of business organization and their finance.

According to OECD, a more centralized and integrated technology agenda offers further efficiency advantages. Making sure that all public services are taking part in this initiative and are bound by the government agenda will increase the benefits for business.

The reduction of formal requirements in the Commercial Law could be considered from a wider perspective. Such initiatives should be pursued against the background of introducing electronic forms of documents and identification as well as the practical implementation of such electronic solutions, OECD said in its report.

OECD also said that reform amendments could be collected and enacted as reform packages in less hasty waves. Reform initiatives could be explained to the general public by concentrating on key measures and principles. Websites and other information should be structured to allow easy access. For example, the structure could follow the events in the life of a business (such as creation, paying taxes and liquidation). Laws and relevant websites could also be made available in English.

As part of the “Consult First” initiative, it would be important to clarify which rules are essential (immediate enforcement) and which are not (consult first). Stakeholders also suggested establishing the “Consult First” initiative as a right for businesses as opposed to a discretionary remedy of the relevant state agency.

To be effective, a one-stop-shop service for businesses should be built from the perspective of the users, and not from the perspective of the providers. Latvian public services that could be part of a one-stop-shop approach are, for example: the Enterprise Registry, the State Land Service, Land Registry offices, the Patent Office, the Tax Authority and relevant licensing authorities. Ideally, businesses should not have to differentiate between the competences of state agencies or have to identify and cope with the relevant legal provisions. In addition, users should only be required to provide a certain piece of information once.

OECD noted that the recent reform also aimed at reducing the lengths of court proceedings. As a result, the duration of proceedings in civil, criminal and administrative matters generally decreased. Respectively, the duration went from 9.2 months in 2013 to 7.4 months in 2017 (civil cases), from 6.4 months in 2013 to 5.4 months in 2017 (criminal cases), and from 13.5 months in 2013 to 7.5 months in 2017 (administrative cases).

OECD report applied data from an online survey of about 300 business representatives operating in Latvia and consultations with government and NGO sector.