On Thursday, 1 December, the Saeima in the final reading adopted the law on asset declaration, which requires natural persons to declare their assets.
Jānis Reirs, Chairman of the Budget and Finance (Taxation) Committee, which was responsible for the draft law, emphasised that “together with the Legal Bureau of the Saeima and responsible authorities, we have accomplished an enormous task, and it will be possible to start implementing the asset declaration system as of next year. The new law requires inhabitants to report the property in their possession and to state the amount of cash on hand, thus curbing shadow economy, which is crippling competition and hindering the fight against corruption”.
The new law requires natural persons to declare their assets as of midnight on 31 December 2011. This regulation will apply to those who have purchased real estate in Latvia whose purchase value exceeds LVL 10,000 and for which propriety rights have not been registered; the law will also apply to those who has purchased real estate abroad. Savings in cash, shares purchased in Latvia or abroad, debt securities, loans, debts and other property exceeding LVL 10,000 in value will also have to be reported. Property which is already registered in state registries will not have to be reported.
The law stipulates that declared savings in cash exceeding LVL 10,000 will have to be deposited in a credit institution according to the procedure and by the deadline set by the Cabinet of Ministers, which will have to issue the relevant regulations by 1 February of next year.
The law also provides an opportunity for natural persons to legalise income gained in the period from 1 January 1991 till 31 December 2007 for which income tax has not been paid. A 15% income tax payable to the state budget will be imposed upon such previously unreported income. The tax will have to be paid within 30 days of submitting the asset declaration; if the total amount of tax to be paid exceeds LVL 1,500, it will be possible to make the payment in three instalments.
According to the new regulations, it will be possible to legalise only income that is subject to the Law on Personal Income Tax; thus, it will not be possible to legalise fraudulently or illegally obtained financial means, such as proceeds from drug trafficking.
The asset declaration system will apply to residents of Latvia, namely, citizens, non-citizens and foreigners, who have obtained a permanent residence permit or a permanent residence certificate in Latvia. It will not apply to public officials who submit annual income declarations to the State Revenue Service; however, these persons will be obliged to deposit in a credit institution any savings in cash exceeding the amount of 20 minimum monthly salaries.
This declaration will have to be submitted to the State Revenue Service only once – in the period from 1 March 2012 until 1 June 2012. It will be possible to submit it in person, to use the electronic declaration system of the State Revenue Service, or to send it by registered mail.
The Law on Declaring Assets and Unreported Income of Natural Persons will come into force on the day after its proclamation.
Saeima Press service