According to reports from the Latvian News Agency, a seminar on the shadow economy in the Baltic region was held in Riga that day. Research findings presented at the meeting by Sauka, an expert from the Stockholm School of Economics in Riga, showed that in 2013, Latvia's shadow economy accounted for 23.8% of its GDP, an increase of 2.7 percentage points compared to 2012, with the construction sector seeing the most significant growth in the shadow economy. Last year, the shadow economies of Lithuania and Estonia accounted for 15.3% and 15.7% of their respective GDPs, both showing a year-on-year decline (compared to 18.2% and 19.2% in 2012).
Sauka believes that the growth of Latvia's shadow economy last year was mainly related to hidden profits, which increased to nearly 20% last year. The proportion of "envelope wages" (referring to cash wages used to evade taxes) decreased slightly but remains a major issue. In 2013, the phenomenon of illegal employment in Latvia remained at the 2012 level. Regarding the amount of bribes paid by companies to obtain state orders last year, Latvia's index increased, while those of Lithuania and Estonia decreased. The regions in Latvia with the fastest growth in the shadow economy were the Riga region, Riga city, and the Kurzeme region.
Latvia's shadow economy was 36.6% of GDP in 2009, 38.1% in 2010, 30.2% in 2011, and 21.1% in 2012.
The above data and conclusions were derived by Latvian experts through questionnaire surveys conducted with 500 companies in each of the Baltic countries. The survey shows that Latvian entrepreneurs are relatively satisfied with the work of the State Revenue Service, but remain very dissatisfied with the national tax policy. In Lithuania and Estonia, this index has declined.
