There are 4 982 companies in Latvia, at least 20% of shares in which are owned by people from other countries, which Latvia and European Union consider offshores or countries that that do not meet internationally agreed standards for tax transparency and information exchange.
This was reported in the information from open data platform Okredo. Among those companies are 3 148 in which 100% of shares are owned by offshore owners.
Russia has been on the list of offshores since 2022.
In companies the 20% of shares of which are owned by foreign shareholders, the majority of which are from Russia – in 70.36% cases, followed by Cyprus (7.55%) and Israel (6.3%).
Among the most popular sectors in which companies with offshore shareholders operate include wholesale trade and retail trade (16.84%), real estate (9.19%), as well as professional, scientific and technical operations (6.02%). Another 35.75% companies listed sectors that do not fit in NACE economic activities categories.
Companies in which more than 20% of shares are owned by offshore shareholders, owners also come from exotic places like Virginia Isles (26 Latvia-based companies), United Arab Emirates (13), Belize (10), Panama (9) and the Bermuda Isles (4).
“It is important for companies to pay attention to who are the shareholders in the companies with which they cooperate – both because there is an increased risk of various sanctions against such companies and their owners, and because offshore companies often serve as locations for money laundering operations,” warns Okredo manager Dr. Gerda Jurkoniene. “Knowing the origin of their partners’ capital allows companies to accurately evaluate risks and not be afraid that their partners’ or their own capital could be unexpectedly frozen for violations of sanctions or tax regimes.”
The report mentions that a portion of companies owned by foreign shareholders have managed to achieve turnover of several dozen millions and profits of millions in recent years despite having only up to five employees. Looking at companies that declared their revenue for 2021 and 20% of shares in which are owned by foreigners from offshores, 375 companies had a turnover that exceeded millions.
At the same time, companies either do not mention the number of employees or have no more than five employees officially.
“Companies that cooperate with companies that have foreign capital, should pay attention to partners that have few employees and a large turnover. Red flags among such companies include non-submitted financial accounts and lack of information about the number of employees. It is also important to keep in mind that after procurement of goods using a mediator the risk of sanctions may appear for the end seller as well,” stresses the expert.
Okredo open data platform operates in Latvia, Lithuania, Estonia, Britain and Poland. The platform provides up-to-date information from enterprise registers, tax administrations, labour institutions and court administrations.
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