Construction, Financial Services, Latvia, Legislation, Real Estate, Wages

International Internet Magazine. Baltic States news & analytics Friday, 19.04.2019, 05:57

Proportion of unreported pay in Latvian construction sector estimated at 24.4%

BC, Riga, 13.04.2018.Print version
The share of unreported pay in the Latvian construction sector is 24.4%, Dace Peleka, acting secretary general of the State Revenue Service, told journalists today, cites LETA.

The Revenue Service’s acting head noted that this was a large proportion and that it had remained practically unchanged in recent years despite the measures taken by the Revenue Service. In 2015 the unreported wages accounted for 24.1% and in 2016 for 24.4%. In 2016, Latvia’s budget lost EUR 58.4 million in unpaid taxes in the construction sector.

Peleka said that the problem had to tackled in cooperation with the construction sector and that a general agreement setting the minimum wage in the industry might be a solution because around a third of employees in the construction sector officially receive less than the minimum wage.

The Revenue Service’s acting head underlined the importance of construction for the Latvian economy, as the sector employs 23,089 taxpayers, or 6.6% of all taxpayers, and 58,885 employees or 6.4% of Latvia’s employed population.

In 2017, taxes paid by the construction sector accounted for EUR 189.39 million or 2.2%. Peleka said that these were mostly taxes on labor, but that together with reverse charged value added tax they totaled nearly EUR 700 million.

Peleka noted, however, that thanks to the construction sector’s growth and measures aimed at combating shadow economy some things had changed for the better in recent years. The amount on labor taxes paid by the construction sector last year grew by 10.8% from 2016, while the total value of deals increased by 26.6%.

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