Analytics, Financial Services, Latvia, Legislation, Markets and Companies, Shadow economy, Taxation

In a discussion organized by Nozare.lv, director general of State Service Revenue (SRS), Inara Petersone was asked to estimate the amount of shadow economy in Latvia. She said that SRS is not the institution that can estimate how severely the shadow economy has affected the budget, nevertheless, SRS is able to analyze the figures that appear in tax declarations.

Sauka, who did a research on shadow economy in the Baltic States, indicated that no one is able to provide a specific figure.

"Our research indicates that shadow economy makes up 23.8% of GDP, while Schneider estimated 25.5% of GDP. Both studies were based on different methodologies, however, the results are quite similar. Due to the applied methodology, the research results by Stockholm School of Economics in Riga are considered to be the lowest shadow economy threshold, but Schneider's – the highest. Thus, we can conclude that the shadow economy in Latvia could be about 24.5% of GDP. Therefore, if Latvia's GDP is about EUR 20 billion, then the shadow economy could be around EU 5 billion," Sauka said.

Petersone indicated that a large proportion of shadow economy is present at small enterprises, the proportion of which is very high in Latvia. "The more small enterprises there are, the larger shadow economy is," Petersone said.