The grey car service sector accumulates nearly EUR 200 million every year, as reported by Automotive Association with reference to results of a recent study.
The association notes that in 2022 the state budget lost EUR 135 million to the grey car service sector in unpaid VAT and EUR 58 million in unpaid PIT and social insurance contributions.
Compared to survey results of 2020, the grey economy in the car service sector is up by 25%, the association concluded.
According to the association, one solution is the adoption of a voluntary certification system for car service centres and introduction of state-approved industry standards.
This system would allow investing and developing medium and high level car service centres, as well as subject them to additional quality criteria. Additionally, these service centres will be able to participate in public procurement procedures, perform warranty-covered repairs, repair electric vehicles, as well as provide technical inspection services in the future, the association suggests.
The association also notes that the initiated certification system would provide advantages to those who have an honest business, when compared to the ones who work “in the shadow”.
The board chairman of the Automotive Association, Saeima deputy Andris Kulbergs says that car services in Latvia operate in different realities – those who try to work honestly and those who are “outside the law”.
“The grey economy sector that reaches up to 90% of the car service sector has completely distorted competition, preventing companies from developing. Nearly all chain companies have left the sector and no companies are in a hurry to join the market, because it is nearly impossible to make an honest living. To resolve this enormous problem, it is not enough to punish service centres. We need a national solution to help raise the competitiveness for honest car service centre,” Kulbergs adds.
LETA previously reported that on the 16th of April the Saeima Budget and Finance Committee’s Shadow Economy Combatting Subcommittee decided to request the Ministry of Economics to look at the Automotive Association’s proposal to adopt a voluntary licencing system in Latvia.