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

After getting acquainted with the State Revenue Service's progress with combating shadow economy, the finance minister urged Inara Petersone, Director-General of the State Revenue Service, to continue active work, paying particular attention to public catering companies.

"Taking into account the recent major tax fraud case in the restaurant business, I urge the service to continue the fight against shadow economy in the public catering sector. It is unacceptable that such companies are deceiving their customers – taxpayers. The Gan Bei case will not be the last major tax evasion case," said Reirs.

With the start of the new outdoor cafe season, the ministry and Revenue Service keep receiving a growing number of complaints about public catering companies not providing customers with receipts indicating the value added tax.

"Because enormous work has been done to bring order to tax collection in various sectors, I urge to focus on the major tax fraud cases, especially with regard to elimination of large-scale tax fraud schemes. I also call on society to be less tolerant toward tax dodgers," said the finance minister.

As reported, an organized group connected to the owners of the Gan Bei restaurant chain stole between EUR 700,000 to EUR 800,000 per month from the company's cash registers, or approximately 50 percent of monthly turnover. In December 2014, the Finance Police detained seven persons involved in this scheme, including the wife of MP Sergejs Potapkins (Harmony), who was one of the ring leaders of this criminal group.

According to Firmas.lv, the Gan Bei chain of restaurants is operated by the company Lage Ko. In 2013, Lage Ko achieved EUR 11.5 million in turnover and posted EUR 238,877 in profit.