Millions in Euros amassed this year by cracking down on the underground economy and streamlining tax regulations - Finance Department report
In the first seven months of this year, the State Revenue Service (VID) of Latvia has collected an impressive EUR 7 million due to measures aimed at curbing the shadow economy and improving tax administration. These measures, which include the introduction of fuel restrictions and a shift towards cashless payments, have proven to be effective in boosting the country's revenue.
One of the key measures introduced from January 1, 2025, is a restriction on the fuel tank capacity of commercial vehicles entering Latvia from third countries. The tank can now contain no more than 200 liters of fuel. This new rule has not only provided additional excise duty revenue for the domestic market but has also potentially prevented the import of more than 13 million liters of duty-free fuel into the European Union (EU) in just seven months. Previously, on average, around 1,200 liters per tank were imported.
The new measures are expected to generate additional revenue for the domestic market beyond the planned revenue of EUR 6.7 million for 2025. The State Revenue Service (VID) reported the collection of this revenue.
To facilitate the identification and prevention of cases of the shadow economy, the VID has developed an analytical tool for data-driven decision-making. This tool is designed to help in the efficient identification and prevention of such cases.
The shift towards cashless payments has also been significant. Cashless payment has been established as the primary form of wage payment, further aiding in the improvement of tax administration and the reduction of the shadow economy.
While the total additional tax revenue generated from measures to combat the shadow economy and improve tax administration in the years 2026 and 2027 has not been explicitly reported, the World Bank has approved €27.25 million for modernizing tax administration in Latvia. This funding aims to improve efficiency and transparency, potentially increasing revenues in the future. Specific sums for 2026 and 2027 additional tax revenues are not currently detailed.
However, it is clear that the measures taken so far have been successful in boosting Latvia's revenue and are expected to continue to do so in the future. The new measures are aimed at curbing the shadow economy and improving tax administration, contributing positively to the country's economy.
