State Revenue Service’s (VID) actions in battling grey economy in the hospitality sector are practically unseen, said President of Association of Hotels and Restaurants of Latvia Andris Kalniņš in an interview to LTV programme Rīta panorāma.
“Grey economy is a big problem in the hospitality sector. We’ve never kept this secret and we continue stressing it,” said Kalniņš.
He mentioned the adoption of a lower rate of value added tax (VAT) would be a good mechanism for fighting grey economy. It could help equalise the “playing field” between honest and dishonest businesses.
At the same time, Kalniņš said that VID believes that introduction of a lower VAT rate would not help battle grey economy all that much, even though lowering VAT for fruits and vegetables typical for Latvia did help lower grey economy in that sector.
“I would like to throw a stone in the VID field, because we have been fighting for the reduced VAT rate since at least 2018, but the shadow economy as it was then, the same is now. I would like to throw the stone in VID’s field, because we have been fighting for a reduced VAT rate since 2018. However, grey economy has not changed at all since then. I don’t see anything that has been done since then to lower it,” said the association’s president.
Kalniņš also said that VID should either act to lower the presence of grey economy in the hospitality sector or find a tool to help accomplish this. “Either do your jobs and lower grey economy, or let’s use other instruments,” he said.
Representatives of the hospitality sector plan to gather for a rally outside the Saeima today, the 31st of October, to request VAT to be set at 12% for public catering services. The rally will go on from 10:30 to 12:30.
The protest campaign will be part of a joint initiative of the hospitality industry in the Baltic States, with the aim to draw attention to the problems of the industry, strengthen the sustainability and competitiveness of the industry. Similar promotions will also take place simultaneously in Lithuania and Estonia.