CONTENTS - Valsts ieņēmumu dienests gada parskats eng.pdf · CONTENTS INTRODUCTION OF THE SRS...
Transcript of CONTENTS - Valsts ieņēmumu dienests gada parskats eng.pdf · CONTENTS INTRODUCTION OF THE SRS...
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CONTENTS �
INTRODUCTIONOFTHESRSDIRECTORGENERAL 2
BASICINFORMATION 3
OPERATIONPRIORITIESANDRESULTS 6
RESULTSOFBUDGETPROGRAMSANDSUBPROGRAMS 7
MANAGEMENTANDOPERATIONIMPROVEMENTSYSTEMS �3
TAXADMINISTRATION �5
TAXREVENUECOLLECTIONBYTHETYPESOFTAXES 20
CUSTOMSACTIVITIES 32
COMBATINGFINANCIALCRIME 50
SUPERVISIONOFEXCISEGOODSCIRCULATION 57
CONTROLOFTHEOPERATIONOFSTATEOFFICIALS 63
TAXENFORCEMENTANDRESOLUTIONOFDISPUTES 67
INTERNATIONALCOOPERATION 7�
BUDGETINFORMATION 74
PERSONNEL 78
SRSANDSOCIETY 82
PLANSFOR2006 86
CONTENTS
2
INTRODUCTION OF THE SRS DIRECTOR GENERAL
As a result of an active and intensive working year,
theStateRevenueServicehasachievedgoodwork results.
ThebasictaskoftheStateRevenueServiceistoensurethe
implementation of state budget revenue plan and, in this
sense,year2005hasbeenparticularlysuccessful–taxand
non-taxrevenueadministeredbytheSRSintostatebudget
has been collected by 29,5% more than in 2004, and that
is the greatest increase over the last 7 years. Of course,
the increaseof taxrevenuehasbeenpromotedalsobythe
economicdevelopmentofLatvia,though,undeniably,itisas
welltheresultofworkdonebytheSRS.
Toensuregoodworkresults,greatattentionlastyearwaspaidtotheimprovement
oftaxcontrolactivities,introductionofvariousnewandmodernworkmethods–the
developmentofdatabases,riskassessmentoftaxavoidanceandevasion,purposeful
and efficient implementation of tax control measures, as well as the introduction of
movementofelectronicdocuments.Inthesameway,strategicplanshavebeendeveloped
lastyear,aswellastheiractionplansforallmainstructuralunitsoftheservice.
As regards the contribution of the State Revenue Service to the improvement
ofbusinessenvironment, Iwould like tonote that theservicehascontinuouslypaid
specialattentiontoinformationandeducationoftaxpayers,includingtheorganisation
ofdifferentseminarsfreeofcharge.Lastyearagreatnumberofproposalsalsohave
been made for the amendments of legal provisions to prevent the deficiencies found in
legalprovisionsonthebasisofconstructivesuggestionsoftaxpayers.Newwebsiteof
theStateRevenueServicehasbeendevelopedlastyearthat,incomparisontotheold
one,ensuresverywideopportunitiesand is considerablymoreconvenient sourceof
informationacquisition.
ThetaskandobjectiveoftheStateRevenueServiceistopromotevoluntarytax
payment,therefore,in2006wewillproceedwithalreadystartedactivitiestobecomethe
partneroftaxpayersinfairaccomplishmentofliabilitiestowardsstate,specialattention
payingtotheimplementationofdifferentpreventivemeasures.
DirectorGeneraloftheStateRevenueService
Dzintars Jakāns
3
BASIC INFORMATION
The foundation of the SRS
Thelaw„OntheStateRevenueService”wasadoptedinNovember28,�993;it
determined the establishment of unified revenue administration institution – the State
RevenueService(hereinafter–theSRS),combiningtwoorganisationsfoundedafter
theretrievalofindependenceoftheRepublicofLatvia–StateInspectionofFinance
that was responsible for tax collection, and Customs Board that was responsible
for customs duties and fees and international trade. Main objectives of the SRS
establishmentwere:
- toachievetheestablishmentofmorefairtaxsystem;
- toimproveco-operationwithtaxpayers;
- toformsocialideaaboutthenecessityoftaxpayment;
- toestablishrespectivetaxpayerservices;
- toreducebureaucraticprocessandprocedures;
- toreduceadministrativeexpenditure.
Today theSRS is an institutionof direct governanceunder the supervisionof
MinisterofFinancethatensurestheaccountingoftaxpaymentsandregistrationof
taxpayers,collectionofstatetaxes,feesandothermandatorypaymentsdetermined
by state in the territory of theRepublic of Latvia, collection taxes, fees and other
mandatorypaymentsintotheEUbudget,andalsoensuresthecollectionofduties,
feesandothermandatorypaymentsoncustomsborder,carriesoutthepolicyofstate
customs, implements efficient protection of society and environment and ensures the
observationofcustomsregulationson theexternalborderof theEUand thestate
territory,balancingitwithpromotionoflegalexternaltrade.Mainlegalactsregulating
theoperationoftheSRSare:thelaw„OntheStateRevenueService”,law„OnTaxes
and Fees”, Customs law, the European Union Customs code and regulations of its
introduction, law „On Prevention of Conflict of Interest in Activities of Public Officials”,
StateCivilServicelaw,Labourlaw,LabourProtectionlawandotherlegalprovisions
4
BASIC INFORMATION
The Objectives of the SRS
- ensureequaltermsforalltaxpayersinthestate;
- promotetaxcompliance;
- formthecivicconsciousnessaboutthenecessityofpayingtaxesandvoluntary
taxpayment;
- promotetradeandentrepreneurship;
- ensurediverseandqualitativeserviceforclients;
- protect society, economy and environment, developing the detection and
preventionofviolationofcustomsregulationsandcriminaloffences.
The Main Tasks of the SRS
- ensure the collection of the state taxes, fees and othermandatory payments
administeredby theSRS in the territoryof Latviaandon customsborder, as
wellasthecollectionoftaxes,feesandothermandatorypaymentsfortheEU
budget;
- implementstatecustomspolicyandensuretheprotectionofcustomsborder;
- preventanddetectcriminaloffencesinthesphereofstatetaxes,feesandother
statemandatorypayments,aswellasinthesphereofcustomsaffairs;
- ensure the training of the SRS officials (employees), as well as consult taxpayers
according to the procedure determined by the legal provisions in issues of
applicationoftaxlegislation;
- registertaxpayersinaccordancewiththeproceduredeterminedbylegalprovisions
andcontroltheconformityofregistrationdocumentstotherequirementsoflaws
andactualsituation;
- ensuretheimplementationoflegalprovisionsregulatingthemovementofexcise
goods, react to international situation in the sphereof safetyandprotect the
societyandenvironmentfromouterthreat;
- protecttheEUexternalborderandco-operatewithothernationalandinternational
institutions;
- ensurethecomplianceofSRSperformancewiththeprioritiesoftheEU.
5
BASIC INFORMATION
Structure of the SRS
FirstDeputyDirectorGeneral–DirectorofNational
CustomsBoard
DeputyDirectorGeneral
FirstDeputyDirectorGeneral–DirectorofNational
TaxBoard
DeputyDirectorGeneral
NationalCustomsBoard
CustomsCriminalInvestigation
FinancePolice
NationalTaxBoard
StrategicDevelopment
ProcurementandAdmnistrationof
Resources
IT
CorruptionPrevention
FilingandRecordsOffice
Director
Latgaleregionaloffice
Zemgaleregionaloffice
Vidzemeregionaloffice
Rigaregionaloffice
Kurzemeregionaloffice
RigaCustomsregionaloffice
DGOffice
FinancialDepartment
LargeTaxpayers
LegalDepartment
InternalAudit
PersonellManagement
ExciseGoods
Pre-courtResolutionofTaxDisputes
InternationalRelations
SecrecyRegimeAssurance
6
OPERATION PRIORITIES AND RESULTS
PRIORITIES AND RESULTS OF THE ACTIVITIES
• Budgetprogrammsandsub-programmsperformanceindicators
• Mangementandoperationimprovementsystems
• Taxadministration
• Taxrevenueperformancebytypesoftaxes
• Customsmatters
• Combating of financial crimes
• Supervisionofexcisegoodsmovement
• Control of the operation of state officials
• Taxenforcementandresolutionoftaxdisputes
• Internationalcooperation
7
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
Analysisoftheimplementationofresultsofbudgetprogramsandsubprograms
and the evaluation of efficiency of the expenditure of state budget assets
Title of results
Competent
structural
unit of the
SRS
Plan
of the
report
period
Actually
in report
period
Explanations of the
deviation of results
33.00.00 program “State tax administration”
Numberofstaff
units
Finance
department
3602 3284 StaffturnoveroftheSRSin2005is�2.6%.
In2005onaverage thereare9%vacan-
cies of staffing, to which competitions have
beenannounced
Stateandmunicipal
income inland ad-
ministered by the
SRS(millionsofLs)
National
TaxBoard
2284,8 243�,70 State and municipal income inland
administeredbytheSRSwerecollectedin
theamountof243�.7millionLatsandthe
implementation of plan reached �06.4%.
The main factors influencing the excess of
plan:
-changes of legislation (the change of
payment procedure by Latvia entering
intotheEU,thechangeoftaxrates)and
economicprocessesinstate(theincrease
oftheamountsofforeigntrade,increase
of the amounts of transferred cargo,
increaseofretailingturnover,increaseof
consumptionprices);
-the improvement of tax administration
process(developmentoftaxcontrolwork,
theobjectiveofwhichistoensurethatall
taxpayerswouldpaythedeterminedtax
payments in budget in defined amounts
accordingtocertaindeadline,reducethe
possibilitiestoevadetaxpayment,thus,
preventingthelossesofbudget,ensure
theprotectionoffairtaxpayers);
8
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
-the improvement of taxpayers’ service
work, ensuring taxpayers’ consultation,
informationandeducation in the issues
oftheapplicationoftaxlegalprovisions;
-theincreaseofthenumberoftaxpayers
– legalpersons (inDecember3�,2005
therehavebeenregistered�30772tax-
payers–legalpersons,thatarefor3496
taxpayersor2.7%morethaninDecem-
ber3�,2004)
34.00.00 program “Customs operation guarantee”
Numberofstaff
units
Finance
department
�53� �4�8 StaffturnoveroftheSRSin2005is�2.6%.
There are on average 7% vacancies of
staffing in 2005, to which competitions
havebeenannounced
includingspecialised
attachesinBrussels
� �
Collection of Cus-
tomspayments(mil-
lionsofLs.)
National
Customs
Board
2�3,4 225,4 In2005theexcisetaxrateforexcisegoods
was increased(beerandalcohol)andthe
number of transactions taxed with VAT
increased,crossingtheEUexternalborder,
aswellasthetotalturnoverofgoods.
Customscontrol
stationsonrailways
havebeenadopted
forexploitation
National
Customs
Board
�50000 208382 Innovationshavebeen introduced in the
sphereofcustomscontrolin2005:
�)newprocedureoffreightphysicalcon-
trolhasbeendeveloped;
2) identification and control of functions
delegatedtocustomsandcriteriaoftheir
implementation;
3) three freight scanning facilities began
theirwork in2005(two inSRSLatgale
RegionalinstitutionandoneinSRSRiga
Customsregionalinstitution)
9
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
Customscontrol
stationsonrailways
havebeenadopted
forexploitation
National
Customs
Board
� x In2005therehadbeenplannedtoaccept
forexploitationthecustomscontrolstation
on railway „Šķirotava”, but, taking into ac-
countthefactthat,duringtheconstruction
operationsduetotheprojectshortcomings
and inadequacy with the real situation ,
thereappearedthenecessitytocarryout
supplementaryworknotprovidedbyproj-
ectthatinitiallydelayedtheplannedcourse
of construction work, the implementation
deadline of the construction agreement
wasprolongedtillMay3�,2006.
Railwayweighing-
machineinstalled
ontherailway
National
Customs
Board
2 x In2005therehasbeendevelopedproject
ofrailwayweighing-machinecustomscon-
trol station „Šķirotava” and, after the de-
velopment of the project was finished, pro-
curementprocedurewaslaunched-open
competitionwhereformsofapplicantswere
notreceived,and,thus,themethodofpur-
chasewas changed into theprocedureof
negotiation.Duetothedelayofpurchase
procedure,theagreementontheconstruc-
tionofscaleswassignedonlyinDecember
of2005.
Materialsconsidered
accordingtothepro-
cedureofArticle�09
oftheCodeofCrimi-
nalProcedureofthe
RepublicofLatvia
Customs
Criminal
Board
69 69
Materialsconsidered
accordingtothe
procedureofArticle
369ofthelawof
CriminalProcedure
Customs
Criminal
Board
�5 26 Reorganisation of the SRS customs insti-
tutions involved in fight against smuggling
hasbeencarriedoutin2004;itgaveanop-
portunityforSRSCustomsCriminalBoard
toraiseactualindicatorsofeffective
�0
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
ness,comparingwith theone foreseen in
theplanof2005.
Criminalcaseshave
beenprosecuted
Customs
Criminal
Board
48 48
Criminalprocedures
havebeenevoked
Customs
Criminal
Board
�2 3� Reorganisation of the SRS customs insti-
tutions involved in combat of smuggling
hasbeencarriedoutin2004thatgavean
opportunityfortheSRSCustomsCriminal
Boardin2005toraiseactualindicatorsof
effectiveness,comparingwiththeonefore-
seenintheplanof2005.
Finishedinvestiga-
tions
Customs
Criminal
Board
�0 �4
Criminal cases sent
for evoking criminal
persecution
Customs
Criminal
Board
2� 32
Statementsofad-
ministrativeoffences
madeinimplement-
edcontrols
Customs
Criminal
Board
300 338
35.00.00 program „Provision of detection and prevention of offences of
financial nature, corruption””
Numberofstaff
units
Financede-
partment
256 23� StaffturnoveroftheSRSin2005is�2.6%.
On average there are �0% vacancies in
staffing in 2005 to which competitions have
beenannounced
Thematerialshave
beenconsidered
accordingtothe
procedureofArticle
�09ofTheCodeof
theCriminalProce-
dureoftheRepublic
ofLatvia
Finance
Police
Department
907 92� New lawofCriminalprocedure came into
forcebyOctober�,2005and the related
changesintotheprocedureandorganisa-
tionof investigationwork,aswellaswith
theoptimisationof the implementationof
functions influencing the executions of in-
dicators
Criminalcaseshave
beenprosecuted
Finance
Police
Department
48� 483
��
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
Criminalprocedures
havebeenevoked
Finance
Police
Department
�50 229
Criminalcasessent
forevokingcriminal
persecution
Finance
Police
Department
320 393
Statementsof
administrative
offencesmade
inimplemented
controls
Finance
Police
Department
500 498
Controlsperformed
instateandmu-
nicipalinstitutions
onthenon-submis-
sionofthelistsof
state officials and
theamendmentsof
theselistsaccord-
ing to the definite
procedureandthe
submissionofin-
completelists
Corruption
Prevention
Department
300 422 Numberofunplannedcontrolactivitiesper-
formeduponthedemandofothercontrol-
linginstitutionsincreasedin2005.
Thetaxreturns
of state officials
received,registered
andputindatabase
Corruption
Prevention
Department
60000 7877� The number of officials has increased by
state officials changing workplaces, by de-
velopingnewinstitutionsandreorganising
theexistinginstitutions
Lists of state officials
andtheamendments
oflistsofstateand
municipalinstitutions
received,registered
andputindatabase
Corruption
Prevention
Department
3500 382� Bydevelopingnewinstitutions,aswellas
intheresultofactiveSRScontrol
�2
RESULTS OF BUDGET PROGRAMS AND SUBPROGRAMS
Decisionsmadeon
bringingtoadminis-
trativeresponsibility
Corruption
Prevention
Department
�00 580 Implementingmorestrictcontrolinobser-
vation of deadlines for submission of the
tax returns of state officials and the obser-
vationofprocedure for thesubmissionof
the lists of state officials and the amend-
mentsoftheselists.
37.00.00 program “Provision of the documentation required for legal circulation of goods”
Numberofstaff
units
Finance
Department
�5 0 In 2005 the possibility was evaluated to
movenon-staffemployees,whoensurethe
administrationoftherealisationofwaybills
of goods, to staff. Itwill be implemented
in2006.
Plan and Implementation of Financing Allocated to Prior Activities in 2005
Title of Prior Activity
Financing allocated
and used for prior
activity (Ls)
Additionally assigned
staff units for the
implementation of
prior activity
Guarantee of administrative capacity in relation
to administrative, technical, finance management
and control of the EU co-financing projects
57932� 57
The SRS information systems and the improve-
mentandmaintenanceofrelatedinfrastructure
857735 -
Administration of excise tax on oil products and
guarantee of monitoring of the movement of oil
products
295795 25
FinishingtherenovationoftheSRSRigaCustoms
Regional Office in Riga, Citadeles street 1
720�25 -
The maintenance of mobile x-ray equipment for
the customs control of the EU external border
boughtin2004withintheframeworkofStateIn-
vestments’programprojectOP03„CustomsPosts
onBorders”
87000 -
The maintenance of mobile x-ray equipment for
thecustomscontroloftheEUexternalborderpre-
sentedbyUSAgovernmentin2004
69752 -
�3
MANAGEMENT AND OPERATION IMPROVEMENT SYSTEMS
Systems of Internal Control
Toimproveanddevelopthesystemsofinternalcontrol,theSRSisregularlyper-
forminginternalaudits.Accordingtothestrategicplanofinternalaudit28auditswere
carried out in 2005. Most significant among them were: the evaluation of computer
engineeringguaranteesystem,theevaluationofcustomsguarantees’controlsystem,
theevaluationoflocalcustomsclearanceprocedureconformity,theevaluationofbusi-
nessinsolvencyprocessandpayingoftaxarrearscontrolsystem,theevaluationof
excisetaxadministrationofoilproducts,theevaluationofconclusionandimplementa-
tionofeconomiccontracts,controlofaccounts,theevaluationofmanagementcontrol
system,theevaluationoftheplanningorthepurchasesofcomputersandsoftware
andthenecessityofnewtechnologies,theevaluationofintellectualpropertycontrol
work,theevaluationoforganisationandco-ordinationoftaxpayers’controlmeasures,
theevaluationofthecomplianceofmanagementinternalcontrolmeasureswiththe
implementationofthetasksdeterminedbytheSRSanti-corruptionplan,theevalua-
tionofworkqualityofconsiderationoftaxpayers’complaintsandapplicationsinthe
sphereof taxadministration, theevaluationofmovement, registrationand control
ofdocuments,theevaluationof„envelopesalaries”eliminationcontrolsystem,the
evaluationofsafetyandcontrolofinformationsystems,theevaluationofadministra-
tionworkofTraditionalOwnResourcesAaccount,theevaluationofcustomsdebtad-
ministrationprocess,theevaluationoftheadministrationofTraditionalOwnResources
separateaccount(Baccount),theevaluationofinternalcontrolsystemoftheimple-
mentationofco-operationcontracts,theevaluationofbudgetimplementationof2004
(utilisation of financial resources according to programs, allocations and estimates,
theirconformitytotheannualreport), theevaluationofcontrolsofdatacredibility
ofVATdeclarations,theevaluationofauditprocessworkqualityandinternalcontrol
system, the evaluation of customs control of agricultural goods’ export, the efficiency
evaluationofriskanalysissystemincustomscontrolprocess,theevaluationofcontrol
systemofaccountingandtaxcalculationofphysicalpersons–taxpayers,theanalysis
of recommendations and revision materials implemented by State Audit Office, the
evaluationofsupervisionandcontroloftheirimplementation,evaluationofcompeti-
tions,staffselectionandacceptanceoperation.Oneunplannedinternalaudithasbeen
alsocarriedoutin2005–theevaluationoftaxpayers’servicequality.
�4
Major strategic projects implemented and launched in 2005:
- SRS Plan of Measures for the Prevention of Corruption Possibilities has been
approvedinFebruary�0,2005foryear2005-2008;
- TheStrategyofSmugglingPreventionandCombatingofSRScustomsinstitutions
hasbeenapprovedinMarch22,2005foryear2005-2009;
- TheSRScustomsoperationstrategyhasbeenapprovedinMarch24,2005for
year2005-2009;
- TheSRStaxadministrationstrategyhasbeenapprovedinApril�5,2005foryear
2005-2009;
- TheSRSStrategyofPreventionandDetection(Combating)ofCriminalOffences
intheSphereofStateRevenueanditsintroductionplanhavebeenapprovedin
September20,2005foryear2005-2009;
- The development of SRS Strategic memorandum for 2006-20��, SRS Client
servicestrategyfor2006-20��,SRSPersonnelmanagementanddevelopment
strategyfor2006-20��andSRSStrategyofCorporateIdentityConsolidationfor
2006-20��,aswellasthedevelopmentoftheintroductionoftheactionplansof
theabove-mentioneddocumentswasstartedin2005.
MANAGEMENT AND OPERATION IMPROVEMENT SYSTEMS
�5
TAX ADMINISTRATION
ThemaintasksofSRSintheareaoftaxadministrationare:toensurecollectionof
statetaxes,feesandothermandatorypaymentsadministeredbySRSintheterritory
ofLatvia,aswellascollectionof taxes, feesandothermandatorypayment to the
EuropeanUnionbudget, to registerandensurerecordsof taxpayers inaccordance
with the procedure provided by the legal provisions and to control conformity of
registrationdocumentswith the requirementsprovidedby the lawsand theactual
status,toconsulttaxpayersconcerningquestionsofapplicationofthelegalprovisions
inaccordancewiththeprocedurestatedinthelegislation,toco-ordinateandcarry
outexchangeofinformationbetweentaxadministrationsandjointinternationalaudits
inaccordancewithsignedinternationaltreatiesandlegislativeactsoftheEuropean
Union.TheNationalTaxBoard,SRSLargeTaxpayersDepartment(hereinafter-LTD)
and SRS territorial offices in co-operation with state and local government institutions
ensuretheperformanceofSRStasksintheareaoftaxadministration.
Thefollowingprioritieshavebeenstatedinthetaxadministrationfortheyear
2005:
- ensuringtheperformanceofthetaxrevenueplan;
- controlofthevalueaddedtaxfortransactionscarriedoutinLatvia,aswellas
withintheEuropeanUnion;
- controlofpersonalincomefornaturalpersons;
- controlofpaymentofsalaries“inenvelopes”;
- improvement of administrative co-operation and mutual assistance with the
EuropeanUnionmemberstatesintheareasofcontrolofthevalueaddedtaxand
controloftaxpayersinvolvedinmovementofexcisegoods;
- improvementofperformancequality.
Number of taxpayers
AccordingtothedataoftheTaxpayersRegisteron3�December2005,ifcompared
to3�December2004,thenumberoftaxpayers-legalpersonshasincreasedby3496
legalpersons,thenumberofVATtaxablepersonshasincreasedby3087persons,the
totalnumberofnaturalpersons-employeeshasincreasedby206�6naturalpersons
andhasreached939747naturalpersonsattheendoftheyear2005,butthenumber
ofself-employedpersonshasincreasedby2�9�self-employedperson.
�6
TotalbudgetrevenuesadministeredbySRS(millionLs.)
�456.35�634.50
�823.202���.�2
2657.07
0
500
�000
�500
2000
2500
3000
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
Performance of budget revenues administered by SRS
Taxandnon-taxrevenuesadministeredbySRSconstitute inthestatebudget
2657,07millionLatsintheyear2005,thatisby545,95millionLatsor25,9%more
thanintheyear2004,andthisisthebiggestincreaseduringthelastsevenyears.
Theperformanceoftherevenueplanfortheyear2005is�06,4%(itshouldbenoted
thatinaccordancewiththelaw““Amendmentstothelaw“OnStateBudgetforthe
year2005”“thebudgetrevenueplanadministeredbySRSfortheyear2005hasbeen
increasedby�74,85millionLatsor7,5%).
TAX ADMINISTRATION
Dynamicsofthenumberoftaxpayers
�27276
5548�
250�4
�30772
58568
27205
0
20000
40000
60000
80000
�00000
�20000
�40000
3�.�2.2004. 3�.�2.2005.
Legalpersons
VATtaxablepersons
Self-employedpersons
�7
TAX ADMINISTRATION
The State Budget Revenue Administered by SRS for the year 2005
Types of taxes
Revenue (million Ls)
“Difference
(the year 2005 -
the year 2004)”
Perfromence
of revenue
against the
annual plan,
%2004. 2005. million Ls %
Corporateincometax �27.85 �80.67 52.82 4�.3 �06.�
Valueaddedtax 486.67 677.�0 �90.42 39.� �09.9
Exciseduty 236.93 3�4.03 77.�0 32.5 �08.6
Customsduty �7.�5 �9.25 2.�0 �2.2 �05.6
TheBankofLatviapayments 2.26 0.49 -�.77 -78.2 �00.0
Paymentsfortheuseofstatecapital 43.73 48.36 4.64 �0.6 �0�.2
Gamblingandlotterytax 7.72 9.94 2.22 28.8 �03.�
Passengercarandmotorbiketax 4.9� 9.5� 4.60 - ��7.5
Statefeesandpayments 60.86 76.24 �5.38 25.3 �09.7
Penaltiesandsanctions �0.36 9.56 -0.80 -7.7 73.2
Othernon-taxrevenue 6.57 ��.72 5.�5 78.3 �32.8
Statesocialinsurancemandatory
paymentys
662.39 780.62 ��8.23 �7.8 �04.5
Personalincometax 435.53 509.25 73.72 �6.9 �03.7
Naturalresourcestax 8.20 �0.34 2.�5 26.2 �22.4
Total 2 111.12 2 657.07 545.95 25.9 106.4
Increaseof taxandnon-tax revenuesadministeredbySRS in theyear2005,
compared to the year 2004 was mainly influenced by:
- improvement of tax administration process
SRSTaxAdministrationStrategyfortheyears2005-2009hasbeendeveloped
in order to ensure continuity of the strategic process and single approach to
achievement of common goals. The Strategy is developed by continuing
the improvement of the on-going activities regarding improvement of tax
administration,aswellasbycarryingoutnewtasks,whicharedeterminedby
activitieswithinthecommonmarketoftheEuropeanCommunity.
�8
The most important factors and performed measures, which influenced the state
budgetrevenuesadministeredbySRSfortheyear2005:
• continuousimprovementofthenationaltaxlegislation, itbecomesmore
cleartotaxpayers;
• Co-operationbetweenthetaxadministrationandtaxpayersbecomescloser,
the level of services to taxpayers increases, taxpayers consultationwork
becomeswider,whichallowstaxpayerstoapplythelegislationproperly;
• electronicdeclarationsystem(hereinafter-EDS) is improved,application
of which allows submission of 96% of all returns, declarations and tax
calculations.TheincreaseinthenumberofdocumentsacceptedbyEDSis
anevidenceofdevelopmentofEDSsystem-��2timesduringtheperiod
200�-2005;
• increased attention is paid to de-registration of taxpayers from the VAT
TaxpayersRegisterforfailuretocomplywithtaxpayers’obligationsprescribed
bythelegalprovisions,thustryingtopreventactivitiesofdishonesttaxpayers
induetime.
- changes in legislation
WhenLatvia joined theEuropeanUnion theprocedureof paymentof indirect
taxeschangedasof�May2004.Startingfrom�may2004 indirecttaxeson
goodsimportedfromtheEuropeanUnionmemberstatesarecalculatedandpaid
bythe�5dayofthefollowingmonth,bycreatingoffsetofthepaymentterm.The
changes had the most significant influence on the revenues of the value added
taxandexciseduty,whichresultedinincreaseoftheserevenuesby37%inthe
year2005comparedtotheyear2004.
When Latvia joined the European Union, customs legislation of the European
Unionbecamebinding,thustheEuropeanUnionratesofthecustomsdutyand
tradepolicymeasureswereappliedtothosegoods,whichwereimportedfrom
thecountries,whichwerenotmemberstatesoftheEuropeanUnion.Starting
from�May2004,whentransportinggoodswithintheEuropeanUnion,customs
dutyisnotappliedanymore,butinrelationtogoodsimportedfromthecountries
outside the European Union, the European Union customs tariffs are applied.
Thusincreaseratesofthecustomsdutyrevenuehavedecreased.
TAX ADMINISTRATION
�9
TAX ADMINISTRATION
- economic processes in the country
In the year 2005 the increase of tax revenue was also influenced by increase in
theamountofforeigntrade,increaseofthevolumesoftransportedshipments,
increaseofretailtradeturnover,aswellasincreaseofconsumerprices.
- results of the economic development
In the year 2005 increase of tax revenues was influenced by growth of the gross
domesticproduct,increaseintheamountofforeigntrade,increaseofthevolumes
oftransportedshipments,increaseofretailtradeturnover,increaseofconsumer
prices,increaseoftheaveragesalariesforemployees,aswellasincreaseofthe
numberoftaxpayers-legalpersons.
20
Corporate income tax
Intheyear2005therevenueofcorporateincometaxconstituted�80,67million
Lats,whichwasby52,82millionLatsor4�,3%morethanintheyear2004andby
�0,42millionLatsor6,�%morethanplanned.
Regardlessofgradualreductionofthecorporateincometaxrateto�5%(inthe
year2002–22%,intheyear2003–�9%,intheyear2004–�5%),corporateincome
tax revenue has increased, which was influenced by payment of amounts recalculated
fortheyear2004andtheincreaseoftheadvanceamounts.
Value added tax (hereinafter - VAT)
In the year 2005VAT revenue constituted 677,�0million Lats,whichwas by
�90,42millionLatsor39,�%morethanintheyear2004andby60,95millionLats
or9,9%morethanplanned.
The national economic processes influence the amount of VAT revenue, level of
welfare of population, legal provisions, as well as flow of tax payments and the claimed
refunds.
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Corporateincometaxrevenue(millionLs)
98.42�09.7�
93.94
�27.85
�80.67
0
50
�00
�50
200
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
Valuieaddtedtaxrevenue(millionLs)
350.57 383.0�459.2 486.67
677.�
0
�00
200
300
400
500
600
700
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
2�
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Excise duty
In the year 2005 the revenueof
excisedutyconstituted3�4,03million
Lats,whichwasby77,�0millionLats
or32,5%morethanintheyear2004
and by 24,75 million Lats or 8,6%
morethanplanned.
Increase of excise duty revenue
was basically determined by change
in the excise duty rates for separate
excisegoods(tobaccoproducts,oilproducts) intheyear2004andstartingfrom�
January2005,aswellaschangeofexcisetaxpaymentprocedure.
In the year 2005 the excise duty revenue structure has slightly changed, if
comparedtotherevenuestructureoftheyear2004.Proportionofexcisedutyforoil
productshasincreasedby0,7%andconstitutes63,3%,proportionofexciseduty
fortobaccoproductshas increasedby�,8%andconstitutes�3,8%,howeverthe
proportion of excise duty for other excise goods (non-alcoholic beverages, coffee)
hasdecreasedby�,4%andconstitutes�,6%,proportionofexcisedutyforbeer-
by0,8%andconstitutes2,9%,proportionofexcisedutyforalcoholicbeverages-
by0,3%andconstitutes�8,4%.
Excise duty revenues by groups of excise goods
Groups of excise goodsRevenue (million Ls)
“Difference
(the year 2005 – the
year 2004)”
Performance
of revenue
against the
annual plan,%2004. 2005. milj.Ls %
Alcoholicbeverages 44.32 57.59 �3.27 29.9 ���.�
Beer 8.70 9.06 0.36 4.2 �03.5
Tobaccoproducts 28.50 43.39 �4.88 52.2 ��8.4
Oilproducts �48.38 �98.93 50.55 34.� �06.4
Otherexcisegoods 7.03 5.07 -�.96 -27.9 �00.0
Total 236.93 314.03 77.10 32.5 108.6
Decreaseofexcisedutyrevenueforotherexcisegoodsisexplainedbythefact
that starting from � May 2004 no excise duty is collected for passenger cars and
Excisedutyrevenue(millionLs)
�60.97 �77.5�2�2.�3
236.93
3�4.03
0
50
�00
�50
200
250
300
350
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
22
motorbikes,buthasbeenreplacedbypassengercarandmotorbiketax.Intheyear2004
passengercarandmotorbiketaxhasbeencollectedintheamountof9,5�millionLats.
Personal income tax and State social insurance mandatory payments
Therevenuesofpersonalincometaxin2005amountto509,25mln.Lats,which
exceeds the level of 2004 by 73,72 mln. Lats or 16,9 % and the fulfilment of the
annualplanofrevenuesexceedstheprojectionsfor�8,05mln.Latsor3,7%.
Thecollectedstatesocialinsurancemandatorycontributionsin2005amountsto
780,62mln.Lats,whichexceedsthelevelof2004by��8,23mln.Latsor�7,8%and
therevenueplanfortheyear2005isexceededby33,28mln.Latsor4,5%.
In2005comparingwiththeyear2004theamountofbothrevenuesofpersonal
incometaxandrevenuesofthesocialinsurancemandatorycontributionshasincreased.
Thatwasduetoresultsoftheeconomicalgrowth,aswellasincreaseofaveragerate
ofwagesandamountofemployees.
Taking into consideration the fact thatwithan increaseof rateof state social
insurancemandatorycontributionsrevenuein2004tocomparewith2005,therate
ofpersonal incometaxincreasehasloweredby�,7percent,revenuesofpersonal
income tax are influenced by the following factors:
- Non-taxableminimumaswellasrateofprivilegedamountfordependantpersons
isincreasedfromtheJanuary�,2005;
- Growthinthereimbursementofpersonalincometaxaccordingtotheeffective
legislation. Upon submitting the income tax returns the taxpayers – natural
persons are entitled to receive back a part of the paid personal income tax
amountswhenpresenting thedocumentsproviding theexpenses incurred for
educationandhealthcareservices.
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Revenuesofthestatesocialinsurancemandatorycontributions(millionLs)
484.06537.80
574.25662.39
780.62
0
�00
200
300
400
500
600
700
800
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
Revenuesofpersonalincometax(millionLs)
284.803�8.9�
367.28435.53
509.25
0.00
�00.00
200.00
300.00
400.00
500.00
600.00
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
23
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Natural resources tax
Thecollectednaturalresourcestaxin2005amountsto�0,34mln.Lats,whichis
for2,�5mln.Lats26,2%morethanin2004andfor�,89mln.Latsor22,4%more
than targeted figures.
Theincreaseoftherevenuesofnaturalresourcestaxin2005ascomparedwith
2004canbeexplainedbytheamendmentsintheLaw„OnNaturalResourcesTax”,
changingtheprocedureofcalculationandpaymentofthenaturalresourcestax.As
fromMay�,2004thenaturalresourcestaxdoesnothavetobepaidatthemomentof
importingenvironmentallyharmfulgoodsandpackagingofgoodsintotheterritoryof
Latvia–thetaxiscalculatedandpaidfortheenvironmentallyharmfulgoodssoldor
utilisedfortheprovisionofowneconomicactivitiesintheterritoryofLatviaduringthe
precedingquarterandforthepackagingofgoodsuntilthe20thdateofthefollowing
month.Thusthenaturalresourcestaxispaidonceaquarter.Incasethecalculatedtax
inaccordancewiththebasicratesdoesnotexceed�00Latsperyearincomplianceto
theabovelawthetaxpayershallcalculateandpaythenaturalresourcestaxonceayear
-forthewholeprecedingperioduntilJanuary20ofthefollowingyear.Amendments
totheLawprovidesforthatstartedasofOctober�,2004Naturalresourcestaxin
amount of 22 Lats is applied to vehicles for the first time registered in the Republic of
Latvia. In 2005 the revenues of natural resources tax applied to vehicles for the first
timeregisteredintheRepublicofLatviaamountedto�,63mil.Lats.
Revenuesofnaturalresourcestax(millionLs)
�0.44 �0.589.73
8.20
�0.34
0
2
4
6
8
�0
�2
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
24
Income from the selling of confiscated property or other property
attributable to the state
Selling of confiscated goods and other property attributable to the State is
anothersourceofrevenuesintotheStatebudget.In2005alone,3850rulingswere
madeconcerningtheattributionofgoodsandpropertytotheStateandinthisway
24�,8thousandLatswerecollectedintoStatebudgetandintotheaccountsofproper
stateinstitutions.Ofthisamount74,7%weretherevenuefromthesellingofdaily
commoditiesattributabletotheStateand�0,7%camefromthesalesofautomobiles.
Out of the total revenues98,� thousand Lats or 40,5%werepaid into theState
budget.
In2005asaresultofcontrolmeasurescarriedoutbystateinstitutions�25,�
thousand litresofalcoholand56,4mil.cigarettesweretakenoutofcirculationand
destroyedinaccordancewiththeexistinglegislation.Thereceiptsfromthesalesof
seized fuel in 2005 amounted to 8,9 thousand Lats. In 2005 the informers of the
seizedgoodsandpropertywerepaidaremunerationof47,5thousandLats
Results of Tax Control
Tomakesurethattaxpayerhascorrectlycalculated,timelymadecorrectstate
tax,feesandothermandatorypaymentsdeterminedbyState,intothestatebudget,
theSRScarriesoutregularcontrolmeasures.InaccordancewiththeSRSTaxControl
Strategy foryear2004-2006, the following tax controlmeasureswereused in tax
controlprocess–taxauditing,thematiccheck,supervisionandinspection.In2005
theSRShas carriedoutat least one tax controlmeasure for25905 legal persons
and4290physicalpersons.Fromallthelegalpersonsin2005thethematicchecksof
thetaxcontrolmeasurescarriedoutbytheSRSwere67.7%,taxpayers’inspection
–29.�%,taxauditing–2.7%andsupervision–0.5%.
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
25
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Tax audits
TheSRSin2005hasperformed�9�8audits,fromwhich�2�4or63%arethe
taxauditsoflegalpersonsand704or37%taxauditsofphysicalpersons.Fromthe
numberofthetaxauditsdonein2005,successfulwere�75�taxaudit,effectiveness
is9�%-whichisfor5%higherthanin2004(86%).
In2005theSRShasadditionallyassessed�48.0millionsofLatsorby50%more
thanin2004.
ThelargestproportioninadditionallyassessedtaxsumistoVAT–60.7millionsof
Lats(4�%fromtotaladditionallyassessedsum),corporateincometax–6.4millionsof
Lats(4%)andexcisetax-3.2millionsofLats(2%).Fromallthetaxauditsofphysical
persons(704),theexcisetaxcalculationtophysicalpersonshasbeenmadein507
tax audits about confiscated excise goods. In accordance with Article 22 of the law „On
PersonalIncomeTax”,theSRSin2005hasrequestedsupplementarytaxreturnsfrom
494physicalpersons,theyhavebeenreceivedfrom385physicalpersons(including
alsothesupplementarytaxreturnsrequested in2004).Theassessmentoftaxable
incomehasbeenappliedto�26physicalpersons,additionally�.4millionsofLatshave
beencalculated,includingpersonalincometaxandpenaltyfeeintheamountof0.4
millionsofLats.
Twosimultaneoustaxauditshavebeencarriedoutin2005inco-operationwith
taxadministrationsofSwedenandEstonia.
Numberoftaxaudits
27�6
�72�
2768
�887 �9�8
0
500
�000
�500
2000
2500
3000
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
Sumscalculatedintaxaudits(millionLs)
50.9
�08.7
�33.�
98.3
�48.0
020406080
�00�20�40�60
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
26
Thematic checks
In2005SRShascarriedout33�99thematicchecks,whichismorethanin2004
(330�2).Theeffectivenessofthematiccheckscarriedoutin2005is6�%,whichin
comparisonto2004(58%),hasincreasedby3%.Thematiccheckshadbeencarried
outinrelationto2255�taxpayers,including205�5legalpersonsand2036natural
persons.
In 2005 the SRS have mostly checked employers (�7 363), accounting of
companies(��398)andretailtrade(�0236).
Penaltiesappliedtodetectedoffencesinthematicchecks:
- Intotalfor947�offencesdetectedinthethematicchecksthepenaltywasapplied
inamountof689,0thousandofLsinaccordancewiththeCodeofAdministrative
offencesinLatvia;
- In5�64casestherecordkeepingwasclosedapplyingtheverbalreprimandson
pettyoffences;
- In�236caseswarningontheterminationofeconomicactivitieswereexpressed;
- In7�casestheeconomicactivitywasterminatedinordertocarryoutthespecial
checks.
Checks of employersIn 2005 SRS has carried out �7 363 checks of employers, from witch in
976checkstheoffencesweredetected,including:
- In47�casesor48%fromsalariesofemployeesthetaxeswerecalculatedand
paidimproperly;
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
Numberofthematicchecksanddetectedviolationstherein
�9880
�0676
23372
�3727
330�2
�3943
33�99
947�
0
5000
�0000
�5000
20000
25000
Detectedviolations
Checks
30000
35000
2002.g. 2003.g. 2004.g. 2005.g.
27
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
- In200casesor20%theworkcontractswithemployeeswerenotconcluded.
On offences of employers detected in the thematic checks in 364 cases the
penaltywasapplied inamountof45,8 thousandof Ls, aswell as42warningson
terminationofeconomicactivitywereexpressed,butinonecasetheeconomicactivity
wasterminatedinaccordancewiththeCodeofAdministrativeoffencesinLatvia.
Inchecksofemployersalsoothercontrolstateinstitutionshasbeeninvolved.In
2005SRShascarriedoutthechecksofemployersinco-operationwithStateLabour
Inspection (6�2 thematic checks,effectiveness–��%),withEconomicPolice (46�
thematic checks, effectiveness–3%)andwithState Police (�78 thematic checks,
effectiveness–7%).
Checks of accountingFrom��398checksofaccountingofcompaniescarriedoutbySRS,in4863cases
or43%accountingincompanieshasnotbeenorganisedaccordingtolegalprovisions.
Forthesedetectedoffencesthepenaltyin�894caseswasappliedinaccordancewith
theCodeofAdministrativeoffencesinLatviainamountof204,7thousandofLs.
Checks of retail trade In2005SRShascarriedout�0236thematicchecks,fromwhichtheoffences
detectedin67�0casesor66%.Inthesechecksmostlytheoffencesrelatedtoviolation
ofprocedureofcirculationofgoodsaccountingandwaybills(in2908casesor43%),
non-registeringofrevenues(in693casesor�0%),aswellastheoffencesrelatedto
theuseofcashregistershasbeendetected.
Ondetectedoffencesinchecksofretailtradein43�8casesinaccordancewith
theCodeofAdministrativeoffences inLatviathepenaltywasapplied inamountof
250,0thousandofLs.
Checks related to draw up and use of waybillIn2005SRShascarriedout the5847checksrelated todrawupanduseof
waybills,fromwitchoffenceshavebeendetectedin232�casesor40%.Mostlythe
offencesweretheviolationofdrawupofwaybills–�233casesandviolationofpro-
cedureofaccountinganddepositofwaybills–668cases.
28
Inspection of taxpayers
In2005SRSconducted�5420inspectionsof��98�taxpayers,fromwhich:
- 26�4inspectionsoftaxpayerswereconductedwhohavetaxarrears;
- 2�39inspectionsoftaxpayerswereconductedwhohadrequestedrefundofthe
overpaidVAT;
- �049inspectionsoftaxpayerswereconductedwhodonotobservethediscipline
forsubmittingofreportsordeclarations;
- 3303inspectionsconductedaftertherequestofanotherSRSstructuralunit;
- 345inspectionsconductedaftertheinformationgivenbythethirdparty;
- 259inspectionswereco-ordinatedbytheSRSExciseGoodsDepartment;
- 57��inspectionsconductedduetootherreasons.
Supervision of economic activity
In2005theSRShasperformed3�8observationsofbusinessactivitiesof�73
taxpayersincluding��5legalpersonsand58naturalpersons.Mostobservations–58
%fromalltheobservedlegalpersons–wereperformedontaxpayerswhosebasic
activityistrade,�4%-manufacturingenterprises,5%-taxpayersinvolvedintimber
business,5%-constructioncompaniesand�8%onothertaxpayers.
Tax refunds
- Alongsidewiththe increasingrevenueofVATtheamountof theoverpaidVAT
hasalsoincreased.AmountoftheoverpaidVATasonJanuary�,2006is2�3,90
mill.Lats,whichis56,85mill.Latsor36,2%morethanonJanuary�,2005.
Increaseoftheoverpaidsumwasdeterminedbytheincreasingexternaltrade
aswellasthegrowingextentofconstructioninthecountry.Alongsidewiththe
increasingoverpayment,theamountofVATrefundisincreasingaswell.Thesum
ispaidintothetaxpayerbankaccountsorusedforpaymentofothertaxes.In
2005288,86mill.LatswererefundedasanoverpaidVATrefundandpaidintothe
bankaccountsoftaxpayersorusedforcoveringofothertaxpayments,whichis
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
29
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
50,74mill.Latsor2�,3%morethanin2004.Basedonrequestsforrefundof
theoverpaidVATtherewere27899credibilitychecksperformed.In2005there
weredecisionsadoptedtodenytherefundoftheoverpaidVATintheamountof
�6,6mill.Latsor5,5%fromtherequestedamount.
- In2005SRShasreceived30claimsfortherefundofexcisetaxintheamount
of430,�thous.Latsfromenterprises,whichusethefuelforheatingpurposes.
During the verification of refund claims 3 violations were established that reduced
therefundby8,4thous.Lats.In2005refundstotaxpayersusingfuelforheating
purposesweredisbursedinthetotalamountof408,5thous.Lats.
- In2005theSRSreceived�60764incomedeclarationsclaimingrefundofpersonal
income tax in conformity with attachments on justified expenses (on medicine
andeducation).�53�76declarationsor95%ofallsubmitteddeclarationswere
verified, and in 13 208 declarations delinquencies were established accordingly
reducing the amount of refund by 255,5 thous. Lats. In personal income tax
declarations submitted for year 2004 the amount of justified expenses was 32,65
mill.Lats.Initsturntherefundedamountwas22,34mill.Lats,whichis5,58
mill.Latsofrefundableamountintheformofpersonalincometax.Furthermore
58526incomedeclarationsweresubmittedwheretheincometaxwasreduced.
After the examination of these declarations delinquencieswere established in
3952declarationsandasa result of this refundof personal income taxwas
reduced by 58,3 thous. Lats. Altogether in 2005 the SRS has refunded 8,24
mill.Latsbasedontheinformationprovidedbythetaxpayersinannualincome
declarationsaboutreductionofthepersonalincometax.Itis�,42mill.Latsor
20,8%morethanin2004.
- In 2005 2 727 applications were submitted about the refund of enterprise
income tax in the amount of 9,5 mill. Lats. In order to verify the validity of
the overpayment of enterprise income tax 2 2�5 inspections were conducted
anddelinquencieswereestablished in206cases.Intotal9,49mill.Latswere
paidintobankaccountsoftaxpayersorusedforthepaymentofothertaxesas
enterpriseincometaxrefundin2005.
- In 2005 SRS has received 23 623 applications from producers of agricultural
goodsabouttherefundofexcisetaxforpurchasedfuelintheamountof��,6
mill. Lats. After inspecting the validity of the tax refund delinquencies were
30
establishedin2�5�cases.Hencetheexcisetaxrefundwasreducedby346,9
thous.Lats.Theamountofrefundedexcisetaxtoproducersofagriculturalgoods
forthepurchasedderv(gasoil)hasincreasedby28,4%in2005comparedwith
2004(8,93mill.Latsin2004,��,47mill.Latsin2005).Initsturntheamountof
requestsforexcisetaxrefund(inhectares)totheproducersofagriculturalgoods
forpurchasedderv(gasoil)hasdecreasedby0,2%in2005comparingto2004
(7��642hectaresin2004,7�0��9hectaresin2005).
Administrative Co-operation and exchange of information
In order to strengthen combat against tax avoidance and timely detect tax
fraud cases the system of information exchange and administrative Co-operation
withothergovernmentinstitutionsandprofessionalorganisations,andalsowithtax
administrationsofotherstateshasbeenimproved.
Amongtheprioritiesininternationalexchangeofinformationmostimportantis
theexchangeofinformationintheareaofdirecttaxesbetweenRepublicofLatviaand
memberstatesofEuropeanUnionaccordingtotheJune3,2003,CouncilDirective
2003/48/EKconcerningtaxationofinterestincomefromsavingsaswellasDecember
�9,�997CouncilDirective77/799/EEKconcerningmutualassistancebythecompetent
authorities of the Member States in the field of direct taxation and taxation of insurance
premiumsandalsocontractingcountrieswithwhomRepublicofLatviahasconcluded
internationalagreementsaboutpreventionofdoubletaxationandtaxevasion.Currently
exchangeofinformationtakesplaceinaccordancewithtaxconventions(currently38
taxconventionsinforce),contractsonmutualadministrativeassistanceandautomatic
information exchange, as well as spontaneous exchange of information within the
frameworkofcontract.Currentlycontractsonmutualadministrativeassistancehave
beenconcludedwithtaxadministrationsofSweden,Lithuania,DenmarkandFinland
Ministry of Finance. A contract on spontaneous exchange of information has been
concludedwithtaxadministrationofNetherlands.
In2005informationexchangewithvariousstatetaxadministrationsinthearea
ofdirecttaxationwasaccomplished5�3casesandwithintheframeworkofautomatic
informationexchangeinformationabout��000personswasreceived.
In2005intheareaofVAT482requestsofinformation(SCACforms)hasbeen
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
3�
TAX REVENUE COLLECTION BY THE TYPES OF TAXES
sent to other member states of European Union, �64 replays have been sent to
requestsofothermembersofEuropeanUnion,fromothermemberstatesofEuropean
Union�89requestsofinformationand44�repliestoinformationrequestshavebeen
received, processed and sent to SRS territorial offices. In 2004 within the framework
oftaxtreatiesinformationexchange855informationexchangerequestswerereceived
and855informationrequestsweresentandalsoco-ordinationandprocessingintax
collectioncaseswasperformed,butcorrespondenceinissuesofinformationcollection
withdepartmentsamountedtoaboutof�800requests.
Intheareaofexcisetaxes809repliesweresenttoinstitutionsofEuropeanUnion
taxadministrations,taxpayersofLatviaetc.aboutinformationregisteredinLatvia’s
“SEED”registeraswellasregularexchangeofinformationwasperformedinthearea
ofexcisetaxeswithmembersoftaxadministrationsfromotherstatesofEuropean
UnionwithintheframeworkofproceduressetbyEuropeanCommunity.389excise
earlywarning(EWSE)reportsweresentand440werereceived,58requestsofexcise
goods movement verification system (MVS) were sent and 53 were received.
32
ThemaintasksoftheSRSintheareaofcustomsaretoensuretheimplementation
ofcommoncustomspolicyof theEuropeanUnion, tocollect taxes, feesandother
mandatorypaymentsintothebudgetofLatviaandtheEuropeanUnion,tocontrolthe
compliancewiththelegalprovisionsoncustomsmatters,toensurecorrectapplication
ofcustomsregulationsandequalattitudetoallcustomers,thuspromotinginternational
trade.ThestructuralunitsoftheSRSwithinwhosecompetencyistheimplementation
of customs policy – the SRS National Customs Board, the SRS Customs Criminal
Board, the SRS Rīga Customs Regional Office and the SRS territorial offices’ Customs
Departments(furtherinthetext–theLatvia’sCustomsService),inco-operationwith
otherpublicauthoritiesbystoppingthesmuggledgoodsonborderandpreventingthe
importandexportof conventionallyprohibitedcommodities,promotepublichealth
andsecurityaswellasprotectthemarket.
TheSRSprioritiesfortheyear2005intheareaofimplementationofcustoms
policy were determined in conformity with the main strategic objectives specified
withintheareaofcustomspolicyimplementation:
- Toprotectthepublic,economyandenvironmentbypreventinganddisclosingthe
offencesagainstcustomslegislationandthecriminaloffences;
- Toimprovetheinternationaltradeenvironment;
- Tocalculatecorrectlyandtocollectthecustomspaymentsdue;
- Toensureeffectiveoperationofcustomsservice.
Bysuccessfuloperationsin2005paralleltocustomsservicesofotherEUmember
states,theSRScustomsstructuralunitshaveprovedtheirstabilityandprofessional
capacity,ensuringfreeIntra-Communitymovementofgoodsandprovidingcustoms
controlontheexternalborderoftheEU.SinceLatvia’saccessiontotheEUtheSRS
customsstructuralunitshavemadetheir input intothecommonbudgetoftheEU,
transferring75%fromthecalculatedtotalamountofTraditionalOwnResourcesinto
thebudgetoftheEuropeanUnion.In2005theSRShadextremelygoodresultsinthe
areaofcustomscontrolandprotectionof intellectualpropertyrights.Besidesthat,
awhole rangeofactivitieswere carriedout to improve thebusinessenvironment,
improving the co-operation with traders, providing them with a variety of various
simplifications and relieves of customs clearance procedure, correctly applying the
CUSTOMS ACTIVITIES
33
CUSTOMS ACTIVITIES
provisionsoftheexistinglegislation,implementingnewandmodernisingtheexisting
customsinformationsystemsandimprovingthecontrolpostfacilitiesandclientservice
halls.
Fulfilment of the plan of revenues collected by the SRS customs structural
units
Tax typeRevenues (thous.Ls)
Increase or decrease
(2005 -2004)
2004 2005 (thous. Ls) %
Value Added Tax releasing goods
forfreecirculation
288374,56 �86696,57 -�0�677,99 -35,2%
Excise taxon import for free cir-
culation
�3�684,9 �94��,93 -��2272,97 -85,3%
Customstax �7�46,8 �9246,82 2�00,� �2,2%
Paid in state budget in total 437 206,26 225 355,32 -211 850,94 -48,5 %
WhentheRepublicofLatviaaccessedtheEuropeanUnion,theamountofthevalue
addedtaxcollectedbytheSRScustomsstructuralunitsonreleaseofgoodsforfree
circulationwasconsiderablyreduced.BeginningwithJanuary�,2005theprocedureof
excisetaxadministrationandaccountingwaschanged,providingthatfromthatdate
ontheSRSExciseGoodsDepartmentisresponsiblefortheexcisetaxadministration
andaccounting.AsbeforetheJanuary�,2005theadministrationofexcisetaxforoil
products–thecollection,accountingandcontrol–wastheresponsibilityoftheSRS
NationalCustomsBoard,partofthebusinessesalreadyhadpaidtheexcisetaxdue
intotheaccountsadministeredbytheNationalCustomsBoard,sotheseamountshad
to be returned back, and this is the reason for the negative figures in the table for the
excisetaxcollection.
34
Administration of Traditional Own Resources
By the accession to the European Union Latvia confirmed its readiness to participate
in financing of the EU budget. One of the sources to finance the European Union’s
budgetistheso-calledOwnResources,includingtheTraditionalOwnResources.The
partoftheEuropeanUnion’sTraditionalOwnResourcesthatiscollectedbycustoms
offices, is created by the following:
- Customstax(appliedtogoodsimportedfromthirdcountries);
- Agriculturalpayments(paymentsthathavebeenintroducedinconformitywith
thecommonagriculturalpolicy);
- The final anti-dumping payment (payments that are applied to goods imported
intotheterritoryoftheEUwithdumpingprices);
- Finalcompensationpayment(paymentsthatareappliedtogoodsimportedinto
theterritoryoftheEUandfortheproduction,transfer,processingandexportof
whichhavebeengranteddirectorindirectsubsidies).
The SRS National Customs Board is responsible for the accounting of the
TraditionalOwnResourcesandtheircontrolinconformitywiththeprovisionsofthe
EUlegislation,thesocalledA”and„B”accountsprinciple.Onthebasisofthemonthly
reporton„A”accountpreparedbytheSRSNationalCustomsBoard,theMinistryof
FinancepreparesapaymentorderandforwardsittotheStateTreasurytomakethe
transferintotheEUbudget.AccordingtothelegalprovisionsoftheEuropeanUnion
themember state retains25% from the calculatedamountof theTraditionalOwn
Resourcestocoverthecostsoftheircollection.
CUSTOMS ACTIVITIES
35
CUSTOMS ACTIVITIES
Payments into the account of the European Account of the Bank of Latvia
Reporting period Period of draw-
ing the report
and transferring
the resources
The amount
transferred into
the European
Account of the
Bank of Latvia
(Ls) for the re-
spective period
of 2004
The amount
transferred into
the European
Account of the
Bank of Latvia
(Ls) for the re-
spective period
of 2005
Increase in
comparison with
2004 (%)
January March - 872685 -
February April - �224645 -
March May - �289570 -
April June - �442046 -
May July 786268 ��53�73 47
June August 650539 940820 45
July September 86304� 963546 �2
August October 930602 �306�03 40
September November 946804 ��52373 22
October December �053409 �54890� 47
November January �050436 �368656 30
December February �227048 �503330 23
Total: 7 508 147 14 765 848
36
The results of control activities in customs
Customs audits
ToensureeffectiveSRSoperationinthe
implementationof customspolicy, to check
the correctness of filling in the declarations
and to reduce the time needed for the
clearanceofgoods, theSRSmakes control
activities after the clearance of goods also.
In 2005 the SRS has made 72� customs
audits, from them 98 were customs audits
ofcompaniesand623werecustomsaudits
oftransactions.Duringtheseauditsin9�%
ofthemoffencesagainstcustomsregulations
werediscovered.Intheresultoftheauditsin
2005theSRShasassessedcustomsdebt,arrearsofothertaxesadministeredbycustoms
offices and penalty in total for 6,5 million Ls. If compared with the results of the previous
–2004year,theamountassessedintheresultofcustomsauditshasincreasedby�3%.
Physical control
To ensure the compliance with customs regulations, the SRS officials at customs
controlpostschecktheaccompanyingdocumentsandselectfreightsforphysicalcontrols.
In case if customs offences are discovered, in 2005 the SRS officials have issued 1 282
noticesofadministrativeoffences,asaresultofwhatinconformitywiththeCodeof
AdministrativeOffencesofLatviaforviolationofcustomsregulationslegalandnatural
personsweregivenpenaltiesforintotal�37,4thous.Ls.
Themaintypicaladministrativeoffences:
- importationofnon-declaredgoodshidingtheminprivateluggageandpersonal
cars(non-declaredgoodsaremainlyimportedbyprivatepersons);
- Goodsmostfrequentlyimportedwithoutdeclaringaresmallamountsofcigarettes
andalcoholicbeverages,aswellassugaranditemsofeverydayuse;
CUSTOMS ACTIVITIES
Dynamicsofthecustomsdebt,othertaxesadministredbycustomsofficesandpenalties,
assessedbytheSRS(millionLs)
2.38
5.736.48
0
�
2
3
4
5
6
7
2003.g. 2004.g. 2005.g.
37
CUSTOMS ACTIVITIES
- Fuelismainlyimportedinadditionalspeciallymountedfueltankers,aswellasin
fueltankardshiddeninthepassengercompartmentorluggagecompartmentof
transportvehicles;
- The documents presented to customs offices contain false information – in
accompanyingdocuments incorrect commodity codesare stated, thevalueor
weightofthegoodsisincorrect.
Protection of intellectual propertyWithin the activities on protection of
intellectualrights,in2005theSRShasreceived
the applications of 230 legal subjects with
requests to protect intellectual property, from
them in �46 cases the requests were about
the protection of the European Community
trademarks,designsamplesandplantspecies.
In 2005 the SRS officials during control
activitiesoncustomsmattersin��9caseshave
detained pirate goods or goods with falsified
brandmarks,orcounterfeitgoods.Ifcomparedwiththepreviousyearsthenumberof
caseswhencounterfeitgoodsweredetainedhasconsiderablyincreased,andthatcan
beexplainedbothbyimprovementofcustomsactivitiesandbyincreaseoftheamount
of falsified goods transported.
NumberofAdministrativeoffences'statementsissuedbytheSRSonoffences
againstcustomsregulations
2530
�780�282
0
500
�000
�500
2000
2500
3000
2003.g. 2004.g. 2005.g.
DynamicsofpenaltiesissuedbytheSRSforviolationofcustoms
regulations(thous.Ls)
�92.�2�8.0
�37.4
0.0
50.0
�00.0
�50.0
200.0
250.0
2003.g. 2004.g. 2005.g.
DynamicsofcounterfeitgoodsseizedbytheSRS
�938
��9
0
20
40
60
80
�00
�20
2003.g. 2004.g. 2005.g.
38
Intotalin2005�5906�unitsofcounterfeitgoodsweredetained,withthetotal
valueappr.5,�millionLs.Intotalin2005thepenaltiesappliedforviolationoflegal
provisionsonintellectualpropertyrightshavebeenissuedfor�7400Ls.
Mostfrequentlydetainedcounterfeitgoodsareclothesandfootwear,pirateCDs
withmusic,andsparepartsofpersonalcarsAudi,FordandBMW.Besidesthat,the
falsifiers prefer to sell goods of cosmetics and perfumery labelled with brand marks
of“Lancôme”and“D&G”,aswellasaccessoriesof“Nokia”mobilephones.Clothes
andfootwearmostfrequentlyarelabelledwithfalsebrandlabelsof“Nike”,“Adidas”,
“Reebok”, “Umbro” and “Puma”. In majority of cases the freights with falsified goods
cometoLatviafromEastAsiaandtheirenddestinationmostoftenisthecountriesof
theUnionofIndependentCountries.
Combating of drug smugglingInphysicalcontrolsoffreight,luggageandregularmaildeliveriestheSRSdog
handlerswithspeciallytraineddogsparticipateonregularbasis.Comparingwith2004,
whentheSRSdoghandlersdetainednarcoticsubstancesinfourcases,in2005the
SRSdoghandlersdetainednarcoticsubstancesin3�case.Intotalwiththeassistance
ofthedogsthereweredetainedin2005:
- marijuana–�3,4g;
- hashish–�7,6268g;
- methadone–0,3g;
- poppystraw–4�5g;
- psychotropicsubstances-0,300�5g.
In co-operation with the State Police and the Department of Imprisonment
Facilitiesweredetained:
- marijuana–8,0095g;
- cocaine–0,2�54g;
- psychotropicsubstances–299,934g.
Inadditiontotheactivitiesofdoghandlersintheareaofcombatingsmugglingof
narcotic substances, the SRS officials without the assistance of the trained dogs in the
resultofcustomscontrolactivitiesin3caseshavedetainednarcoticsubstances:
- marijuana–3,4023g;
- hashish–9,6947g;
CUSTOMS ACTIVITIES
39
CUSTOMS ACTIVITIES
- MDMA–0,03g;
- methandienon–9990tablets.
Control of the goods of strategic importance and dual usageAccording to the definition given by the Law on circulation of goods of strategic
importancethegoodsofstrategicimportancearesystems,equipment,partsofthem,
materials,chemicalsubstances,objects,softwareandtechnologies,thatareincluded
inthe listsofgoodsofstrategic importanceapprovedbytheCommitteeofControl
ofStrategic ImportanceGoods,or inotherwords– thesearegoods,softwareand
technologiesincluded,thatcanbeusedbothforcivilandmilitarypurposes,andto
whichallthosegoodsbelongthatcanbeusedbothforcivilobjectivesandformilitary
objectivesandforproductionofnuclearweaponsandothertypeofnuclearexplosive
devices production. For transfer of these goods it is necessary to have specific licences
thatareissuedbytheCommitteeofControlofStrategicImportanceGoods.
In2005theSRShasissuedsixadministrativeoffencestatementsonviolation
oftheregulationsonmovementofgoodsofstrategicimportanceandofdualusage,
andincaseofoneoftheseadministrativeoffencesapenaltywasdeterminedatthe
sizeof6thous.Ls,in5casesthecaseswereclosed.Withintheadministrativecases
thereweredetainedfourfreighthauliers,foursemi-trailers,2355kgpartsofbattle
weaponsand5�unitofpneumaticweapons.
Movement control of conventionally protected goodsOncustomscontroloftheluggageincustomspostsofRigaInternationalAirport,
passenger ports and other customs control posts the SRS officials discover items the
movementofwhichacrossthebordersforprivateneedsisregulatedbytheWashington
convention„TheConventioninInternationalTradeinEndangeredSpeciesofWildFauna
andFlora”–CITES,andit ispossibleonlywithaCITESpermitandthemandatory
veterinarian or fito-sanitary permits.
In 2005 the SRS officials have discovered 12 offences against the Washington
convention„TheConventioninInternationalTradeinEndangeredSpeciesofWildFauna
andFlora”–CITES,asaresultofwhatthepenaltyappliedhasbeenfortheamountof
499 Ls. In the result of the disclosed offences the items of 25 species were confiscated
fromnaturalpersons:
40
- fragmentsofcoralcolony–�4pieces.;
- shells–4pieces;
- bootsofpython’shide–4pairs;
- bagofcrocodile’shide–�piece.;
- purseofmonitor’slizardskin–�piece.;
- turtleshell–�piece.
CUSTOMS ACTIVITIES
Pythonleatherboots
SouvenirsmadefromprotectedspeciescorralsPocilloporasp.andFungiasp
ProtectedspeciesStrombusgigasshell
ProtectedturtlespeciesCheloniidaespp.shell
4�
CUSTOMS ACTIVITIES
Investigation of criminal procedures on customs offences
The investigation of criminal
procedures and operational activities
to discover and prevent criminal
offences on customs matters is the
responsibility of the SRS Customs
Criminal Board. The priorities of the
actions of the SRS Customs Criminal
Boardin2005werecombatingofdrug
smugglingandorganisedcrime.
TheSRSCustomsCriminalBoard
in2005intotalhasevoked79criminal
procedures,thisbeingnearlytwotimes
more than in2004.Numberof cases
sentforcriminalprosecutionwas32,andthisisby�3casesorby4�%morethanin
2004.OnDecember3�,2005theSRSCustomsCriminalBoardwasworkingwith�49
criminalprocedures.
In 2005 several cases of illegal transfer and storingwere discovered.On the
discovered criminal offences there were evoked five criminal procedures, and from
them three have been sent to the prosecutor’s office to evoke criminal persecution.
Withinthesaidcriminalprocessestherehavebeenseized:
- 6,7millioncigarettesofvariousbrands;
- 36tonsoftobacco;
- Threesetsofequipmentforproducingcigarettesinthevalueof��00000USD,
766750EURand3300Ls.
Atthebeginningof2005theSRSCustomsCriminalBoardhasmoreintensively
organisedoperationalcontrolsrelatedtopotentialoffencesinthebranchofmeatpro-
cessing.IntheresultoftheundertakencontrolsanewVATrefundfraudschemehas
beendiscoveredandstopped.Intheareaoforganisedcrimecombatingin2005the
SRS customs offices have stopped or caused substantial inconveniences for the activi-
TheresultsoftheSRSCustomsCriminalBoardininvestigationofcriminalprocedures
Numberofcriminalproceduresevoked
Numberofcriminalprocessessenttoevokecriminalpersecution
29
��
4�
�9
79
32
0
�0
20
30
40
50
60
70
80
2003.g. 2004.g. 2005.g.
42
tiesofsevenorganisedgroups.Theactivitiesofthesegroupsweremainlyrelatedto
smugglingofnarcoticsubstancesaswellascigarettesandtobacco,andtoproduction
ofcigarettes.Thevalueofgoodsseizedfromthecriminalgroupswas�535000Ls.
Themostimportantcriminalprocessesevokedin2005werethefollowing:
- AttheendofFebruary2005theSRSCustomsCriminalBoardinitiatedacriminal
caseonalarge-scalefraud,havingresultedinlossesforthestateattheamount
ofappr.0,7millionLs.Thefraudulentactivitieswereperformedbyacompany
thatwithintheperiodfromSeptember2003tillDecember2004soldITsoftware
to two offshore companies, artificially seven times increasing the value of the
goods;
- At the middle of September 2005 the SRS Customs Criminal Board has sent
for initiation of a criminal prosecution a criminal case on the abuse of official’s
position by two SRS officials. One SRS official had knowingly supported large
CUSTOMS ACTIVITIES
�,8millioncigarettesdetectedintheloadofnewsprintpaper
2,9millioncigarettesdetectedintheambushmadeincardboard
43
CUSTOMS ACTIVITIES
scale tax refund fraud, the other official – had been negligent towards the official
job responsibilities – filling in and clearing the customs declarations for several
non-existingexport freightsofacompany registered inLatviaat thevalueof
77,0 thousandLs, falsifying thedocuments.Within the frameworkof thesaid
criminalprosecutionithasbeenrequestedtoinitiatecriminalpersecutionoftwo
entrepreneurs;
- At thebeginningofOctober2005thepersonnelof theSRSCustomsCriminal
Boardwentforcontrolonthevessel“Nauta”.ItwasdiscoveredthatonOctober
10, 2005 via Liepāja customs control post without declaring and by use of falsified
customs documents �50 tons of sugar were imported into the state. On the
detectedoffencethecriminalprocedurewasinitiated,andinDecember2005it
wasforwardedforinitiatingacriminalprosecution;
- AttheendofOctober2005theSRSCustomsCriminalBoardaskedtheProsecutor’s
Office for Customs Matters to evoke criminal persecution on a criminal case where
the investigation was on-going for nearly five years. The criminal case was evoked
against several tensofSRS,BorderGuards andSanitaryBorder Inspectorate
officials on supporting and concealing the fact of meat smuggling, malevolent
useofservicepositionandinactivity,havingresultedinheavyconsequencesand
substantiallossesforthestate.
�50tonnsofcugartakenoutofcirculationwithintheframeworkofcriminalprocedure
44
Investigation of criminal processes on smuggling of narcotic and
psychotropic substances
The number of discovered cases of drug smuggling in 2005 is the biggest in
thehistoryof customs. In total in2005 in theSRSCustomsCriminalBoard there
havebeenevoked23criminalproceduresonsmugglingofnarcoticandpsychotropic
substances,thisbeingby�6criminalproceduresmorethanin2004.Theevokingof
criminalprosecutionhasbeenrequestedin�7criminalproceduresonsmugglingof
narcoticandpsychotropicsubstances.
The amounts of narcotic and psychotropic substances seized within the crim-
inal proceduresName of the narcotic and psychotropic substance 2004 2005
Hashish 2,2�46grams 34,9grams
Cocaine 0,0�gram ��6,4grams
Marijuana 20,6grams �3,4grams
Poppystraw 360grams 5435grams
Leavesofcoketree �6,9�25grams -
Diazepam 75tabl.and�0,5amp. -
Codeine 87tabl. �9,2grams
Morphine 5amp. -
Pharmaceuticals containing narcotic and psychotropic
substances
435tabl.and40apm. -
Non-declaredPharmaceuticals 28�tabl.and360amp. -
Ephedrine - 9002grams
MDMA„ecstasy” - 399�,58grams
Metamfetamin - �044,�gram
Amphetamine - 5�,�5grams
Fenazepam - �2,5grams
Phenobarbital - 24grams
Mostimportantcriminalcases/criminalproceduresdiscoveredin2005:
- InMarch2005thepersonneloftheSRSCustomsCriminalBoardinco-operation
withtherepresentativesofStatePoliceinGulbeneregiondiscoveredalaboratory
producingsyntheticnarcoticsubstance-methadone(substituteofheroin);
CUSTOMS ACTIVITIES
45
CUSTOMS ACTIVITIES
- OnApril2005thepersonneloftheSRSCustomsCriminalBoarddiscoveredthe
largestamountinthehistoryofthecustoms–morethanninekg(9002grams)
ofephedrine, thatwashidden ina freightof clothesand footwear, containing
counterfeitgoodsalso,importedfromBulgaria;
- OnApril2005thepersonneloftheSRSCustomsCriminalBoardinco-operation
with the personnel of Rīga city Central Criminal Police Department stopped the
operationsofdrugsmugglingchannelfromWestEuropeancountriestoLatvia.In
theresultoftheco-operationtheshipmentofnarcoticsubstanceMDMA“ecstasy”
tabletswasseized–nearlyfourkg(3989,5088grams);
- OnOctoberandNovember2005thepersonneloftheSRSCustomsCriminalBoard
in co-operationwith theStatePoliceOrganisedCrimeCombatingDepartment
andcolleaguesofLithuanianCriminalPoliceDepartmentstoppedtheactivitiesof
twochannelsofsmugglingnarcoticsubstancesfromLithuania.
Ephedrinedetectedintheloadofclothingandfootwear
Loadof„Extasy”drugs
46
Trade facilitation
In 2005more than 800 tariff quotaswere available to the traders, providing
the possibility to import the specific goods from the third countries with reduced or
zerorateofcustomstariff.During2005840tariffquotaapplicationswerereceived,
controlledandprocessed,and in827casesthequotasweregrantedat thesizeof
100 %. Most frequently asked for were tariff quotas for foodstuff import – fish and
fish products from Norway, Russia and Thailand, wines from Bulgaria and Romania,
instantcoffeefromUSAandBrazil.Byuseoftariffquotastherewereimportedinto
Latvia appr. 2 282 tons of fish and their products, 1 110 742 litres of wine, 570 tons
oforanges,3�5tonsofcoffee.
Improvement of operational quality
Introduction and improvement of information systemsTheuseofmoderninformationsystemsisofgreatimportancefortheimprovement
ofoperationalqualityofcustomsmatters,andforthisreasontheSRSonregularbasis
implementsnewinformationsystemsandimprovestheexistingones.In2005anew
computerised transit system (NCTS) implementation was finished. On July 21, 2005
LatviajoinedthoseEuropeanUnionstatesthathaveintroducedelectronicGuaranty
Management System (GMS). This system provides the possibility for customs offices
tomakeelectroniccontrolsthevalidityanduseoftransitguaranties,thusreducing
theriskofsmugglingandthepossibilitytocauselossestothestatebudget.Forthe
CUSTOMS ACTIVITIES
Metamphetamine
47
CUSTOMS ACTIVITIES
tradersthenewsystemprovidesthepossibilitytoreducetheformalitiesofcontrolsof
guaranty’sadequacy,thussimplifyingthebeginningoftransitprocedureinalltheEU
countrieswherethesystemalreadyisinoperation.
The optimisation process of customs control posts and facilitation of quality of services provided.
In 2005 several client service halls were developed – in the renovated SRS
Rīga Customs Regional Office building in Citadeles street 1 and in merged customs
control posts in Buļļu street 74 and Uriekstes street 3. Besides that, four new, modern
customscontrolposts,orientedtowardstheconveniencefortheclients,(further in
the text – CCP) in conformity with the EU requirements are developed − Rīga Freeport
CCP, Daugavpils Freight Terminal CCP, Rēzekne Freight Terminal CCP and Ventspils
Trade Port CCP. In 2005 the construction of a customs control post in Šķirotava railway
stationhasbeenstarted.
OneofthemaintasksaftertheaccessionoftheEuropeanUnionistheimplementation
ofahighqualityandsecurebordercontrolontheexternalborderoftheEU,meaning.
suchacontrolthatbothpeopleandgoodswouldbecontrolledinconformitywithall
the requirements. To ensure the possibility for freight to cross the borders via the
borderposts,thoseborderpostsshallbeinconformitywiththerequirementssetby
theEU.ForLatviatobeabletocomplywiththeserequirements,since�995theState
InvestmentProgramProjectisbeingimplemented–„OP03Customspostsonborders”.
The financial resources for the project are granted from the state budget. Within the
saidprojectin2005theprojectofrailwaycarriageweighingforcustomscontrolpost
“Šķirotava”. The railway weighs are planned to provide the SRS customs officers with a
possibilitytoweighthecarriagesofatrainduringthecustomscontrolwiththepurpose
todeterminethecustomsvalueofthecommoditiesandtocalculatecustomstax,thatis
oneofessentialcontrolactivitiesofcustoms.In2005theplanningofascaffoldbridge
for oil product control in Rēzekne CCP was finished. The scaffold bridge is necessary to
provide the possibility for a customs official to make customs control in compliance with
jobsecurityrequirements–totakesamplesofoilproducts,chemicalsubstancesand
othersamplesfromthetankersandotherreservoirsofatrain.
ForsupplyofservicestobusinessmenandnaturalpersonsintheSRSterritorial
customs offices in 2005 two customs posts have been merged, thus creating a single
48
merged customs control post 0265. In customs control post in Rīga Free Port an
electronicqueueaccountingsystemhasbeeninstalledtoensurefairsupplyofservices
to the freight hauliers in regular sequence, eliminates any possibility for potential
suspicions and disputes among the freight hauliers about the services supplied to
personsoutofthequeue,andprovidesapossibilitytomeasurethetimeofsupplyof
services.
Taking intoaccount the fact thatwithLatvia’saccession to theEU theborder
with theRepublicof Lithuaniaand theRepublicofEstoniahasbecomean internal
border of theEU, and that there is freemovement of goods across theseborders
without customs control, in 2005 the following customs control post buildings and
infrastructureswereforwardedtotheBorderGuards:
- MeiteneCCP;
- Grenctāle CCP;
- Ainaži CCP;
- ValkaCCP;
- VeclaiceneCCP;
- RucavaCCP;
- SubateCCP;
- MedumiCCP.
Most important customs projects implemented and started in 2005: - Within the framework of the European Union Phare project
No.2002/000-590-��-0�“StrengtheningofCustomsadministrativecapacityby
implementationofmutually compatible customs strategyandEuropeanUnion
databases” there were ongoing activities to develop, implement and test the final
versionoftheIntegratedTariffManagementSystem(furtherinthetext–ITMS).
The implementation of ITMS will be finished in 2006.
- Inco-operationwithEuropeanIntegrationandEconomicDevelopmentAgencyin
AustriaPhare2003TwinningLightprojectNo.LV/03/IB/FI/02-TL“Improvement
ofpost-importationcontrols”hasbeenimplementedwheretheLatvia’ssystem
of post-importation controls was evaluated, including the organisational
structure, methodological instructions and risk management technique, and
recommendationsweregivenforitsimprovement.
CUSTOMS ACTIVITIES
49
CUSTOMS ACTIVITIES
- On November 7, 2005 the co-operation agreement was signed with Swedish
CustomswithinthePhare2003projectNo.LV/2003/IB/FI-08TL“Improvementof
CustomsAnalyticalactivities”withtheobjectivetodevelopcustomsanalysisand
toensureeffectiveriskmanagement,toenhancethedisclosure,combatingand
preventionofviolationsofcustomsregulationsoninternalandexternalborders
oftheEuropeanUnion.
- Active participation has been started in “Customs 2007” exchange program,
contacts have been established with the Exchange co-ordinators of customs
servicesofothercountries.Withinthesaidprogramtheexchangeofexperience
hasalreadybeen in theareaofdoghandlers,physical controls, inworkwith
x-rayscanners,onprotectionofintellectualpropertyrightsandonimplementation
anduseofElectroniccontrolsystemofguaranties.
- WithintheEuropeanUnionPhareprojectNo.2003/004-979-08-0�“Integrated
tariff management system and risk assessment” on April 5, 2005 a bilateral
Twinning Agreement has been concluded, and the requirement specifications are
developedforRiskInformationManagementSystemandforExportControlSystem,
aswellastheexpertsfromSwedenandDenmarkhaveprovidedassistanceinthe
development of the final version of ITMS, its implementation and testing. Besides
that, the state procurement procedurewas organised andService agreement
concluded for thedevelopmentofRisk InformationManagementSystem,and
the development has been already started. The system will be developed till
November30,2006.
- WithintheEuropeanUnionPhareprojectNo.2003/004-979-03-0�“Developmentof
Agriculture product market administration system” the requirement specifications
aredevelopedforDataexchangesystembetweentheStateRevenueServiceand
Rural Support Service, the state procurement procedure has been organised,
theserviceagreementisconcludedforthedevelopmentofthesystem,andthe
system’sdevelopmenthasalreadycommenced.Thesystemwillbedevelopedtill
November30,2006.
50
ThemainobjectivesofSRSFinancePolicedepartmentaretodetectandprevent
criminal offences in the sphere of state revenues and in the activities ofSRS civil
servantsandemployees,andalsotoperforminvestigationincriminalcasesoncriminal
offencesdetectedintheareaofstaterevenuesaswellasintheactivitiesofSRScivil
servantsandemployees.
SRSFinancePolicedepartmentprioritiesin2005were:
- Combatingoforganisedcrime
- Combatinglegalisationofillegallyobtainedmoneyresources
- Combatingtaxfraud
- Combatingcriminaloffencesrelatedto“envelopesalaries”
Optimisation of work
ToensurepossiblyeffectiveperformanceoftasksassignedbylawtoSRSFinance
Policedepartment,implementinginvestigationprinciplesintroducedinthenewCriminal
ProcessLawthatcameinforceonOctober�,2005,aswellasdevelopingthegeneral
organisation of work in institution in line with the experience of law enforcement
institutionsofmoredevelopedcountries,thereorganisationofresourcesandoptimisation
offunctionalperformancewasstartedinSummer2005.
Withintheframeworkofreorganisation:
- FragmentationonstructuralinvestigationworkinSRSFinancePolicedepartment
waseliminated.Nowcriminal investigation isorganised inonestructuralunitof
centraladministration;
- DivisionofFinanceintelligencewasestablishedinSRSFinancePolicedepartment,
which after the completion of structural reform will deal with financial intelligence
issuesinordertoensuremoreeffectiveperformanceofdepartmentsmaintasks;
Although theprocessof reorganisationwasnot fullyaccomplished in2005, the
resultsofperformancein2005testifyaboutpositivetendencies.
Investigation of criminal procedures
The function of SRS Finance Police department as investigation institution is
characterised by the initiated criminal procedures and detected criminal offences
COMBATING FINANCIAL CRIME
5�
COMBATING FINANCIAL CRIME
(criminalcasesorcriminalproceduresforwardedtolawenforcementinstitutionsfor
initiatingofthecriminalprosecution).
Evoked and received criminal procedures/ criminal cases
Therewasanextraordinaryhighnumber
ofevokedandreceivedforfurtherinvestigation
criminal procedures (criminal cases), as well
as the amount of fixed fiscal damage therein.
In 2005SRS Finance Police department have
initiatedandreceivedfortheinvestigation76�
criminal procedures/ criminal cases in total,
which isby��7criminalprocedures/criminal
casesorby�8%morethanin2004.
2001 2002 2003 2004 2005
Evokedandreceivedcriminalpro-
cedures/criminalcasesintotal
34� 386 493 644 76�
Evokedcriminalprocedures/
criminalcases
3�0 359 465 6�5 7�3
Including:
Onthetaxevasion �02 98 �69 �98 229
Onviolationofinsolvency
regulations
��4 �58 �78 �78 20�
Onviolationofaccountancy
regulations
8 �9 4� 64 8�
Onfraud �5 30 22 4� 47
Onothercriminaloffences 7� 54 55 �34 �55
Fixedlossesinevokedcriminal
procedures/criminalcases(mil-
lionsofLs)
34,8 26,0 48,9 34,3 50,5
Receivedcriminalprocedures/
criminalcases
3� 27 28 29 48
Dynamicsofevokedandreceivedcriminalprocedures/criminalcasesinSRS
FinancePolicedepartment
34� 386
493
64476�
0
200
400
600
800
200�.g. 2003.g. 2005.g.
52
In2005splitofevokedcriminalprocedures/criminal cases inpercentageper
types of criminal offences has not changed significantly in comparison with 2004.
Namely, approximately one third - 229 (32%) criminal procedures/ criminal cases
or32%fromallevokedcriminalprocedures/criminalcaseswasevokedonthetax
evasion,20�criminalprocedures/criminalcasesor28%-onviolationofinsolvency
regulations,47%criminalprocedures/criminalcasesor7%-onfraud.
Criminal procedures/ criminal cases forwarded for evoking the
criminal persecution
TheSRSFinancePolicedepartment
haveforwardedfortheevokingofcriminal
persecution 393 criminal procedures/
criminal cases to prosecutors in 2005
which is considerably more – by �33
criminalprocedures/criminal casesor
by 5�% more than in 2004 and has
reached the highest number in the
historyofdepartment’sexistence.
COMBATING FINANCIAL CRIME
Splitofcriminalprocedures/criminalcasesevokedbyFinancialPoliceDepartmentofSRSpertypesofcriminaloffencesin2005
Onothercriminaloffences�55;22%
Onfraud47;7%
Onviolationofaccountancy
regulations8�;��%
Onviolationofinsolvencyregulations20�;28%
Ontaxevasion
229;32%
Dynamicsofcriminalprocedures/criminalcasesforwardedforevokingthecriminalpersecution
�74208
220
260
393
0
50
�00
�50
200
250
300
350
400
200�.g. 2002.g. 2003.g. 2004.g. 2005.g.
53
COMBATING FINANCIAL CRIME
Dynamics of criminal procedures/ criminal cases forwarded for evoking the
criminal persecution
2001 2002 2003 2004 2005
Criminalprocedures/criminal
casesforwardedforevokingthe
criminalpersecution
�74 208 220 260 393
Including:
Ontaxevasion 43 36 36 37 6�
Onviolationofinsolvency
regulations
84 �3� �36 �23 �66
Onviolationofaccountancy
regulations
8 6 25 29 47
Onfraud 4 3 � 6 ��
Onothercriminaloffences 35 32 22 65 �08
Fixedlossesincriminalproce-
dures/criminalcasesforwarded
forevokingthecriminalpersecu-
tion(millionsofLs)
2,9 7,8 2,2 5,� 36,7
Consideringprioritiesof theactivitiesof theyear2005, inthisyearespecially
intensivelyFinancePolicedepartmenthasworkedwithcriminalprocedures(criminal
cases) on tax evasion and fraud,which is seen in the results. In comparisonwith
2005therewasforwardedby65%morecriminalprocedures(criminalprocedures)for
evokingthecriminalpersecutionontaxevasionandby83%morecriminalprocedures
(criminalcases),whichhasbeenevokedonfraud.
In comparison to 2004, in 2005 considerably has increased the amount of fixed losses
incriminalprocedures(criminalcases)forwardedforevokingthecriminalpersecution–
by 3�,6 millions of Ls. In 2005 the number reached 36,7 million Latvian Lats. The
increase of fixed losses in criminal procedures (criminal cases) forwarded for evoking
thecriminalpersecutionrepresentsthepositiveresultofwork,whichhasbeenpromoted
by the utilisation of investigation resources in comply with determined priorities –
combatingoforganisedcrime,moneylaunderingandcombatingoftaxfraud.
Attheendof2005therewere980criminalprocedures(criminalcases)inthe
recordsofinvestigatorsofSRSFinancePolicedepartment,whichisby�06criminal
54
procedures(criminalcases)or�2%morethanin2004andisthehighestindicatorin
thehistoryofdepartment’sexistence.Theincreaseofcriminalprocedures(criminal
cases)intherecordsindicatestocontinuousincreasingamountofworkinSRSFinance
Policedepartment.
Other activities
SRS Finance Police department in 2005 has carried out 227 controls related
to payments of untaxedwages to employees (“envelope salaries”), non-registered
incomeincommercialsocieties,misrepresentingofaccountancydataandevasionfrom
personalincometaxandpaymentofmandatorystatesocialinsurancecontributions.
Intheresultofcontrols��2violationshavebeendetectedandin2�casesthecriminal
procedure(criminalcase)wasevokedthereof.
AsaresultofoperationalactivitiescarriedoutbySRSFinancePolicedepartment
224missing tradersweredetected inyear2005,asa result themoney resources
approximately in theamountof2,7millionsofLsweresuspended in theaccounts
ofcreditinstitutions.Withinthecriminalprocedures(criminalcases)evokedbySRS
Finance Police department (as the guarantee to possible confiscation of guilty person’s
property) 16 cars were seized, and five groupings, which have organised the tax
evasion,VAT fraud, aswell as the legalisation of illegally obtained resourceswere
detected.
Significant investigated criminal procedures (criminal cases)
InMay,2005SRSFinancePolicedepartmenthasforwardedtoprosecutor’s
office for investigation the crimes of finance and economy for evoking the
criminal persecution the criminal case on state officials tax evasionhiding of
accountancydataofdefiniteLimitedliabilitycompany(hereinafter–Ltd),where
thedamageforstatebudget in totalwas��9,45thousandLats.Carryingout
thecontrolinLtdpremises,employeesofSRSFinancePolicedepartmenthave
detected that the salaries were paid in “envelopes”. In the premises having
controlledtheapprovedlistsofsalarypaymentsandjournalsonmonthlysalary
payments,inwhichwiththesignaturesofemployeeshavebeenapprovedthe
COMBATING FINANCIAL CRIME
55
COMBATING FINANCIAL CRIME
unofficialsalaryreceiptinenvelopesinperiodfromthe�January,200�tillthe
20March,2003.
InJune,2005SRSFinancePolicedepartmenthasevokedthecriminalcaseon
group of persons for tax evasion in large amounts, using the falsified documents
of a definite Ltd. Within the investigation of criminal case there was clarified that
organised group of persons, utilising the requisites of fictitious registered enterprises,
have imported inLatviaseveral luxurycars, latersellingthem.Fortheregistration
ofcarsthemissingtradershavebeenusedinordertoevadethepaymentsofvalue
addedtax.Atthesametimegroupofpersonsmentionedbefore,usingtherequisites
of missing traders and bank accounts opened with names of non-residents, had
providedtheservicestootherpersonsattemptingtoevadefromtaxpaymentsand
tocarryoutthemoney“laundering”,includingusingtheaccountsofnaturalpersons.
Carrying out the house-search in clarified addresses, involved into “money laundering”
there have been detained 40 fictitious and 10 offshore companies’ seals, documents,
filled and unfilled sets of strict accounting waybills, as well as i-bank code cards,
Digi-bankpassports,computers,whichhavebeenusedbygroupofpersonsmentioned
beforetocarryoutthecriminaloffences.Inthecourseofthecriminalcaserestrictions
wereappliedandseveralluxuriouscarswereseizedinordertoensurethepossible
confiscation of criminal property and the solution of property issues in several related
criminalprocedures.Carryingouttheinvestigationthecriminalcasewasdividedfrom
basic case on group of persons’ tax evasion in large amounts, using the fictitious
documentsandlegalisationofillegallyobtainedmoneyresourcesinlargeamountson
Section2�8Paragraphtwo,Section275Paragraphtwo,Section�95paragraphtwoof
theCriminalCodeandmaterialsofcriminalcasehavebeensenttoorganisedcrime
and other branch specialised prosecutor’s office to evoke the criminal persecution.
InJuneof2005SRSFinancePolicedepartmentforwardedacriminalcasetothe
prosecutor’s office of investigation of finance and economy crimes to evoke the criminal
persecution on definite Ltd state officials tax evasion and hiding of accountancy data,
whichhavecausedlosestothestateinamountof32,2�thousandLats.Employees
ofSRSFinancePolicedepartmentcarryingoutthepreliminaryinvestigationobtained
sufficient evidence that the Ltd state officials hid the actual calculated and paid salaries
ofemployeesin2002and2003insteadofcomplyingwiththeregulationsconcerning
organisationofaccountancydocumentsdeterminedbylaw.
56
InJuneof2005SRSFinancePolicedepartmentforwardedthecriminalcaseto
the prosecutor’s office of investigation of finance and economy crimes to evoke the
criminal persecution on a definite Joint Stock Company (hereinafter – JSC), which hid
theaccountancydocuments,statistical informationandevaded fromtaxesaswell.
Detectingthe“envelopesalaries”intheJSCstructuralunitsonrequestofSRSFinance
Policedepartmentthetaxauditinghasbeencarriedout,inresultofwhichinaddition
thetaxprincipaldebthasbeenassessedinamountof37,63thousandLats,aswellas
the fine in amount of 37,63 thousand Lats to be paid into the budget of state.
InSeptember of 2005SRS Finance Police department forwarded the criminal
case to the organised crime and other branch specialised prosecutor’s office to evoke
the criminal persecutionon criminal offences–VAT fraudattemptapproximately in
totalamountof8,4millionsofLsandtaxevasionapproximatelyintotalamountof
13,8 millions of Ls, which have been carried out by the definite Ltd in group of persons.
Criminal persecution against four state officials has been requested.
InDecemberof2005SRSFinancePolicedepartmentforwardedthecriminalcase
to the prosecutor’s office of investigation of finance and economy crimes to evoke
the criminal persecution on definite SJC state officials tax evasion in amount of 1,34
millions of Ls. Criminal persecution against two state officials has been requested.
COMBATING FINANCIAL CRIME
Cash of LVL 99 100 and stamps of different institutions and officials
detectedwithintheframeworkofacriminalprocedure
57
SUPERVISION OF EXCISE GOODS CIRCULATION
Maintasksintheareaofexcisegoodscirculationareissuing,re-registrationor
cancellation of the specific permits (licences) and excise tax guarantee certificates
forbusinessoperationswithexcisegoods,administrationofinlandexcisetaxforoil
products,issuingofexcisestampsandcontrollingoftheircirculation,controlactions
in observation of normative acts regulating excise goods circulation, prevention
of violations of provisions of excise goods circulation and application of sanctions
prescribedbythenormativeacts.Tasksmentionedabovearemainlyperformedbythe
SRSExciseGoodsDepartment.
PrioritiesoftheSRSExciseGoodsDepartmentin2005were:
- supervisionofbusinessoperationswithoilproductsparticularlypayingattention
toexpressmethodsincontroloffuelquality;
- administrationofinlandexcisetaxforoilproducts;
- promotion of the capacity of information subsystems which are related to
excisegoodscirculationandadministrationoftheexcisetaxinordertoimprove
informationexchangewithotherstructuralunitsoftheSRSandtaxadministrations
ofotherEuropeanUnionmemberstates.
Inordertoimprovesupervisionofexcisegoodsandadministrationofexcisetax,
RegulationsoftheCabinetofMinistersNo.662fromAugust30,2005“Procedureof
excisegoodsmovement”andRegulationsof theCabinetofMinistersNo.638from
August 30, 2005 “Regulations on excise duty guaranties on alcoholic beverages,
tobaccoproductsandoilproducts”wereadopted.
Licensing
In2005theSRSExciseGoodsDepartmenthasissuedandre-registered50�3
licences for operations with excise goods. There were approximately 9 946 valid
licencesintheareaofexcisegoodscirculationasonJanuary�,2006,whichis302
licencesmorethaninthepreviousyear.Increaseinthenumberofvalidlicencescan
be explained by changes in normative acts that have positively influenced the business
environment. 35 licences for commercial activities have been cancelled in 2005
becauseoftheestablishedviolationsofthenormativeactsintheareaofexcisegoods
circulation,whichissixlicenceslessthanin2004.Thisindicatesthatentrepreneurs
58
asaresultofsurveillanceactivitiestrytoobserveregulationsestablishedbythelaw
inamoredisciplinedmanner.
In accordancewith changes in normative acts regulating circulation of excise
goods, entrepreneurs who until September �, 2005 had received special permits
(licences) for operation of excise goods warehouse and planned to send alcoholic
beverages, tobacco products, oil, coffee or non-alcoholic beverages applying tax
suspension arrangements, to label alcoholic beverages and tobacco products with
excise tax stamps or apply marking of the fuel as a specific kind of fuel mixing, had
tore-registertheirlicencesincompliancewithrequirementsofnormativeactsuntil
November�,2005.
In 2005 theSRSExciseGoodsDepartment has issued and re-registered 269
generalexcisetaxguarantiesforoperationswithexcisegoodsandapplicationoftax
suspensionarrangements.
SUPERVISION OF EXCISE GOODS CIRCULATION
Validlicencesintheareaofexcisegoodscirculation
96449946
8000
8500
9000
9500
�0000
0�.0�.2005. 0�.0�.2006.
59
SUPERVISION OF EXCISE GOODS CIRCULATION
Review of the licensing operations in 2005
Nu
mb
er
of
issu
ed
lice
nce
s
Nu
mb
er
of
rere
gis
-
tere
d l
icen
ces
Number of
cancelled licences
Nu
mb
er
of
susp
en
d-
ed
lic
en
ces
Nu
mb
er
of
re-e
stab
-
lish
ed
lic
en
ces
Nu
mb
er
of
vali
d
lice
nce
s as
on
01
.01
.20
06
.
beca
use
of
vio
lati
on
s o
f
reg
ula
tio
ns
base
d u
po
n t
he
ap
pli
cati
on
of
the t
rad
er
MT Licences for retail
saleofalcoholicbev-
erages
647 �206 �3 250 �0 4 4774
AM Licences for retail
saleofbeer
53 39 0 24 0 0 3�3
VT Licences for whole-
saleofalcoholicbev-
erages
37 47 3 23 � � �66
TM Licences for retail
saleoftobaccoprod-
ucts
�632 867 7 �72 6 3 4�55
TV Licences for whole-
saleoftobaccoprod-
ucts
�� �7 � 8 0 0 45
BM Licences for retail
saleofoilproducts
37 88 2 20 � � 2�6
BV Licences for whole-
saleofoilproducts
4 �7 4 6 � 0 47
Licences for the opera-
tionofexcisegoodsware-
house
42 26� 2 �4 5 4 2�0
Licencesfortheoperation
ofauthorisedtrader
3 5 3 �5 � 0 �9
Licencesfortheoperation
of the representative of
theexcisetaxpayer
0 0 0 0 0 0 �
Total licences 2466 2547 35 532 25 13 9 946
60
Supervision
Inorder toprovidecollectionof theexcise taxonoilproducts, thepriority in
the area of supervision of excise goods circulation and excise tax guaranties was
supervisionofbusinessactivitieswithoilproducts.Therewere�08� fuel samples
takenfromentrepreneursperformingbusinessactivitieswithoilproductsandtheir
qualitytested.Altogether52casesofviolationwerereviewedintheareaofsupervision
of oil product quality and decisions adopted to apply fine in the amount of 8,48 thous.
Lats and to confiscate 100,28 thous. litres of fuel.
In 2005 supervision activities were mainly dedicated to entrepreneurs who
operatewithexcisegoodsandapplytothemtaxsuspensionarrangements,consumers
of denatured alcohol as well as to the supervision of excise goods accompanying
documentsAADandSAAD.
As since March, 2005 Excise goods divisions were established in the SRS
territorial offices, theoretical and methodological training was carried out in the area of
supervision of excise goods circulation. Officials of the SRS Excise Goods Department
and excise goods divisions of the SRS territorial offices carried out joint inspections in
thepremisesofentrepreneursperformingbusinessactivitieswithoilproducts.
In2005altogether3673inspectionswereperformedintheareaofexcisegoods
supervision, 1 298 violations of normative acts established and fines imposed in the
amountof67,82thous.Lats.
Violationsestablishedintheareaofthecirculationofexcisegoodsaremainly
relatedtonon-observanceofaccountingprocedures,usingofimpropercashregisters
for sales of alcoholic beverages and violations of labelling provisions for alcoholic
beverages.
SUPERVISION OF EXCISE GOODS CIRCULATION
6�
SUPERVISION OF EXCISE GOODS CIRCULATION
Review of control measures performed by the SRS Excise Goods Department
in the area of supervision of excise goodsOperations Amount
1. Number of inspections 535
Including:
oilproducts 67%
alcoholicbeveragesandtobaccoproducts 3�%
otherexcisegoods 2%
2. Number of established violations 80
Including:
oilproducts 44%
alcoholicbeveragesandtobaccoproducts 56%
3. Reviewed cases and adopted decisions (total)* 244
4. Fines, Ls (total)* 35 605
5. Amount of confiscated goods (total)*
Oilproducts(litres) �00895,4
Tobaccoproducts �39235packages,8cigars
Alcoholicbeverages(litres) 69538,82
Transport(pieces) 4
*includingcasesregardingviolationofexcisegoodsregulationssubmittedbyotherinstitutions(SRSFinan-
cialPoliceDepartment,SRSCustomsCriminalBoard,StatePolice).
Excise tax stamps
In2005theSRStookoverfromtheMinistryofFinancethefunctionofordering,
receivingandcoveringoftheexpensesrelatedtotheprocurementofexcisestamps
providingmoreoperationalservicetocustomersandquickerresponsetochangesin
orderingofexcisetaxstamps.
349552733excisetaxstampswereissuedtoentrepreneurs.
In20052499990�2excisetaxstampsforlabellingoftobaccoproductswere
issued,which is 7,�% less than in the previous year.Decrease can be explained
bythelargereservesofexcisetaxstampsattheendof2004thatwerecreatedby
entrepreneursduetotheincreaseoftheexcisetaxrateasofJanuary�,2005,and
alsoduetothefactthatnormativeactsdidnotprovidere-calculationofdifference
betweenthepreviousandthenewtaxbase.
62
Therewere99558�9�excisetaxstampsissuedforlabellingofalcoholicbeverages,
whichisby20%morethaninthepreviousyear.Increasecanbeexplainedbythe
markettrends,theincreaseintheconsumptionofalcoholicbeveragesaswellasthe
risingofthetaxrateforstrongalcoholicbeveragessinceJanuary�,2006.
Review on the issued excise tax stamps in 2005
Product category Receivers of stamps Amount (pieces)
Alcoholic beverages Holdersofexcisegoodswarehouses 98964235
Importers 589486
Representativesoftaxpayers 0
Total: 9955372�
Tobacco products Holdersofexcisegoodswarehouses 238858378
Importers 458634
Representativesoftaxpayers �0682000
Total: 2499990�2
Grand total: 349 552 733
SUPERVISION OF EXCISE GOODS CIRCULATION
63
CONTROL OF THE OPERATION OF STATE OFFICIALS
In compliance with the law “On prevention of the conflict of interest in the operation
of state officials” tasks of the SRS in fulfilment of corruption prevention policy are to
controlimplementationofrequirementsforcompletingandtimelysubmissionofthe
declarations, to control implementationof requirements for preparationand timely
submission of lists of state officials, to provide registration and keeping of declarations
of state officials, as well as their publication according to the procedure provided by
the normative acts, to take to administrative accountability state officials and heads
ofstateandmunicipalinstitutionsforviolationoftheprocedureforsubmissionofthe
declaration of the state official or for providing false information in the declaration, and
delayed submission of lists of state officials and their modifications, or the submission
ofincompletelists.
Control of state officials
Number of state officials and submitted declarations
There were 65 046 state officials registered
asonJanuary�,2006,whichis�93�or3,�%
morecomparedtoJanuary�,2005.
78 771 declarations of state officials
weresubmittedwithinayear,whichis7030
declarationsor9,8%morethanin2004.
Numberofstateofficials
63��5
65046
6200062500630006350064000645006500065500
0�.0�.2005. 0�.0�.2006.
Numberofsubmitteddeclarations
7�74�
7877�
68000
70000
72000
74000
76000
78000
80000
2004.g. 2005.g.
64
Established violations and penalties
In 2005 476 state officials were brought to administrative liability for late filing of
income declarations, violation of the procedure for filling and submitting of declarations
and providing of false information, which is almost four times or 375 state officials
morethanin2004.Itcanbeexplainedbytheparticularcontroloverthesubmission
of declarations within fixed deadlines.
Out of 476 state officials brought to administrative liability:
- 395 officials were punished with fine (total 5,9 thous. Lats);
- 70 state officials received verbal reprimand upon closing of the case;
- case has been closed or not initiated against six state officials due to statute of
limitation;
- case has been dismissed against three state officials due to the lack of substance
foradministrativeoffence;
- case has been dismissed against three state officials due to other reasons.
Case materials about 41 state official were sent to the SRS Financial Police
Department for investigation, which is 10 officials or 32,3% more than in 2004. In
2005 criminal cases for non-filing of the declaration has been initiated against five
state officials, cases against two state officials have been dismissed or not initiated
due to the lack of substantial ground, �6 decisionswere adopted not to initiate a
criminalcase,in�6casestheSRShasmadearulingtoapplypenaltybyimposing
fines, issuing verbal reprimands or dismissing charges due to fading out of the due
term.Investigationintwocaseswillbecontinuedin2006.
CONTROL OF THE OPERATION OF STATE OFFICIALS
Numberofstateofficialsbroughttoadministrativeliability
�0�
476
0
�00
200
300
400
500
2004.g. 2005.g.
65
CONTROL OF THE OPERATION OF STATE OFFICIALS
Accordingtoitscompetencyintheadministrationofthelaw“Onpreventionof
the conflict of interest in the operation of state officials” the SRS detects potential
cases of the conflict of interest and informs the Corruption Prevention and Combating
Bureau (hereinafter – CPCB). In 2005 materials about potential conflict of interest
were sent to CPCB on 15 state officials out of which:
- onepersonhasbeengivenawarning;
- CPCB has adopted a decision to bring to administrative liability three state officials
for not reporting about being in the situation of the conflict of interest and violation
of restrictions and prohibitions laid down for state officials by imposing a fine;
- aftertheinspectionperformedbyCPCB,SRSinthreecaseshasappliedapenalty
against state officials for violation of restrictions and prohibitions laid down for
state officials by imposing a fine;
- ineightcasesreviewofthecasematerialswillbecontinuedin2006.
Control of state and municipal institutions
Number of state and municipal institutions, which submit lists of state offi-
cials and their modifications
In2005 thenumberof stateandmunicipal institutions,which submitted lists
of state officials and their modifications has increased by 449 institutions or 13,3%
comparing to 2004. On January 1, 2006 lists of state officials and their modifications
weresubmittedby382�stateandmunicipalinstitutions.
Numberofstateandmunicipalinstitutions,whichsubmit
listsofstateofficials
3372
382�
3000
3200
3400
3600
3800
4000
0�.0�.2005. 0�.0�.2006.
66
Inspections and established violations
In 2005 422 inspections were performed
about compliance of submitted lists of state
officials and their modifications to the established
procedure.Comparedtotheyear2004number
ofinspectionshasincreasedby�66inspections
or64,8%.
Asaresultofinspections�50administrative
offenceswereestablished,whichis56offences
or 59,6% more than in 2004. For established
offencesoftheprocedureforsubmissionoflists
of state officials and their modifications, as well
as for submitting of incomplete lists of state
officials:
- fine has been imposed on managers of 30 institutions (total 1,5 thous. Lats);
- cases against managers of 82 institutions have been dismissed with oral
reprimand;
- casesagainstmanagersof30institutionshavebeendismissedorhavenotbeen
initiatedduetotheexpirationofdueterm;
- threecasesagainstleadershipofinstitutionshavebeendismissedduetothelack
ofsubstanceforadministrativeoffence;
- five cases against heads of institutions have been dismissed due to insignificant
violations.
CONTROL OF THE OPERATION OF STATE OFFICIALS
Numberofinspectionsandestablishedviolations
Numberofestablishedviolations
Numberofinspections
256
94
422
�50
0
�00
200
300
400
500
2004.g. 2005.g.
67
TAX ENFORCEMENT AND RESOLUTION OF DISPUTES
Results of tax enforcement
In2005�45,9mill.Latswerepaidintothebudgetasaresultofenforcement
measures of the SRS territorial offices, which is by 27,0 mil. Lats or 22,7 % more than
in2004.Fromtheenforcedtaxliabilities:
- 50,0mil.Latsor34,3%weresocialinsurancepayments;
- 5�,5mil.Latsor35,3%werevalueaddedtax;
- 30,8mil.Latsor2�,2%-personalincometax;
- 9,4mil.Latsor6,4%-corporateincometax;
- �,5mil.Latsor�,�%-excisetax;
- 2,7mil.Latsor�,7%-othertaxes.
In 2005 25,8% of active tax arrearswere enforced on average eachmonth
while in2004 theenforcement ratewas�8,8%.Improvementof indicatorscanbe
explained by improvement of enforcement operations in the SRS territorial offices as
well as seminars organised by officials of the SRS Legal Department on the issues of
enforcementoflatetaxpayments.
Amountofpaymentsasaresultoftaxenforcement(millionLs)
��8.9�45.9
0
50
�00
�50
2004.g. 2005.g.
68
Results of proceedings in cases of additionally assessed tax payments
In2005SRShadtorepresentitsinterestsforadditionaltaxpaymentassessment
in2057courtsittings,whichis�68courtsittingsor9%morethanin2004.From
2057courtsittings��67werepostponed,in82casesapplicationsoftaxpayersabout
the suspending of administrative acts issued by the SRS officials were reviewed, in 25
casesproceedingsweresuspended,in33casesproceedingswereterminated.
DisputesoftaxpayersandtheSRSaboutadditionalpaymentswerereviewedin
substancein639cases,in44�or69%ofthesecasestheresult(courtdecision)was
inthefavouroftheSRS.In2005theproportionofcasesfavourabletotheSRShas
increasedby2�%(in2004556caseswerereviewed insubstance, fromthesethe
favourableresultwasin266courtsittingsor48%).Resultpartlyfavourabletothe
SRSwasadoptedin63courtsittingsor�0%ofallcases(in2004–43courtsittings
or8%ofallcases),unfavourable–in�35courtsittingsor2�%(in2004–247court
sittingsor44%ofallcases).
From44�courtsittingwheretheresultwasfavourabletotheSRStheproceedings
wereterminated(thejudgementcameintolegaleffect)in�73cases(78%)andasa
resulttaxpayershadtopay�0,8�mill.Latsintothebudget.Theindisputableamount
of the payments into the budget has increased four times compared to the 2004.
In2004from266courtsittingswheretheresultwasfavourable,proceedingswere
terminated(thejudgementcameintolegaleffect)in5�caseandtaxpayershadtopay
intobudget2,77mill.Lats.
TAX ENFORCEMENT AND RESOLUTION OF DISPUTES
69
TAX ENFORCEMENT AND RESOLUTION OF DISPUTES
Pre-court review of tax disputes
In 2005 officials of the SRS Pre-court tax dispute resolution division prepared 721
draftdecisions(in2004therewere935draftdecisionsprepared).
Decisions adopted during the review of cases
Decision after the review 2004 2005
Leftunchanged,including: 545 468
the fine reduced 48 53
Cancelled �28 47
Cancelledinpart,including: �25 59
the fine reduced 9 5
Decidedtoadoptanewdecision � 2
Decidedtoreviewtheappeal �3 9
Reduce the fine 75 90
Not to reduce the fine 4� 30
Decisionadoptednottoreviewtheappeal 7 �6
Total 935 721
TheSRSPre-courttaxdisputesresolutiondivisionprepared�06draftrulingsthat
providedpartialorcompletecancellationofthedecisionsadoptedbythedirectorsof
the territorial offices. One of the main reasons for cancelling the decisions has been
erroneousapplicationofthenormsoftheregulatoryacts(4�case),non-compliance
with the norms of the procedure and insufficient proofs for the substantiation of the
relevantconclusions(20cases).
In2005theSRSPre-courttaxdisputesresolutiondivisionreceivedappealsof
taxpayers on decisions adopted by the directors of the territorial offices imposing
additionalpaymentstothebudgetintheamountof28,2mill.Lats, lossesreduced
by 4,� mill. Lats, losses increased by 390,2 thous. Lats, corporate income tax
reducedby4�,9thous.LatsandtheVATreducedby397,5thous.Lats.Taxpayers
appealed against additional payments into the budget in the amount of 26,7mill.
Latsaswellasreductionoflossesintheamountof3,5mil.Lats.Afterreviewingof
casematerialsdraftdecisionswerepreparedcancellingthepaymentsdeterminedby
decisions adopted by the directors of the territorial offices in the amount of 3,8 mil.
70
Lats(�4,34%oftheamountappealedbythetaxpayers).Inaddition�57,4thous.
Latswereassignedforpaymentintothebudget.
The SRS Director General reviewed 23� appeal of taxpayers to reduce the
additionally assessed fine and in compliance with the Article 331 of the law “On taxes
andfees”in�48caseshemadeadecisiontoreducetheadditionallyassessedpayments
intothebudgetby672,7thous.Lats.In83casesappealsoftaxpayerstoreducethe
additionallyassessedpaymentsintothebudgetweredenied.
IncompliancewiththeArticle4�ofthelaw“Ontaxesandfees”theSRSconcluded
36 agreements with taxpayers cancelling additionally assessed fines in the amount of
279,3thous.Lats.
TAX ENFORCEMENT AND RESOLUTION OF DISPUTES
7�
INTERNATIONAL COOPERATION
Active participation in the events organised by the foreign and international
organisations (European Commission programme Fiscalis/Customs 2003/7, TAIEX,
Intra-EuropeanOrganisationofTaxAdministrations(IOTA),OrganisationofEconomic
Co-operationandDevelopment(OECD),WorldCustomsOrganisation(WCO),European
Anti – Fraud Office (OLAF) etc.) as well as in everyday work of European Council
and European Commission committees has taken place thus promoting the unified
application of the EU legislative acts in the field of taxes and customs and mastering
thebestpracticeofothercountriesinoperationoftherevenueadministrations.
Participationinthehighlevelinternationalevents:
- International tax dialogue – value added tax conference organised by OECD,
InternationalMonetaryFundandItalianMinistryofFinanceinRome,Italy;
- IOTA9thGeneralAssemblyinKrakow,Poland;
- AnnualinternationalmeetingoftheDirectorsGeneralofEUtaxadministrations
“Managementoftaxadministration–objectivesandtheirachievement”Rome,
Italy;
- OECD�0thAnnualGlobalForumonInternationalTaxConventions„Onprevention
ofdoubletaxation”inParis,France;
- The9thMeetingoftheDirectorsGeneralofBalticStatesTaxAdministrationsin
Copenhagen,Denmark;
- Video-conference organised by the World Bank between the specialists from
Latvian and Uzbekistan Tax Administrations regarding use of risk analysis in
planningoftaxcontrolevents;
- WCO2ndconferenceoftheEuropeanregionCustomsServicesdirectorsinAstana,
Kazakhstan;
- Meeting of Leading Customs Official organised by Luxembourg presidency in
Luxembourg;
- Meeting of the Directors of North European countries customs directors on
collaborationissuesinLondon,GreatBritain;
- EuropolmanagementcouncilmeetinginLuxembourg;
- MeetingofthechiefsofPolice,BorderguardandCustomsservicesfromFinland,
Estonia,LatviaandLithuaniainTallinn,Estonia;
- Annual WCO Customs Co-operation council session regarding customs
co-operationissuesinBrussels,Belgium;
72
- MeetingoftheHeadofAsianandEuropeancountriesCustomsServicesorganised
bytheEuropeanCouncilinPebble,Scotland;
- EuropeanCommissioncustomsandcross-borderco-operationconferenceinKiev,
theUkraine.
In promotion of closer co-operation with the tax administrations from other
countries,representativesfromLithuaniantaxadministration,Finishtaxadministration,
aswellasrepresentativesfromUgandataxandcustomsadministrationsvisitedLatvia
in2005.Inpromotionofcloserco-operationwiththecustomsadministrationsfrom
other countries representatives from Swedish Riksdag Tax Commission, German
CustomsCriminalBoardandKingdomofSweden customs servicevisited Latvia in
2005.
In collaboration with the European Commission, within the framework of the
program Fiscalis 2003−2007 seminar on „Excise administrative co-operation issues”
was organised in Riga, where 67 representatives from all the European member
countries and the candidate countries, as well as representatives from European
CommissionTaxandCustomsDirectorateGeneral(TAXUD)participatedintheevent.
The implementationofPhare2003nationalprogramproject „SRSTax control
improvement”wassuccessfullycompletedin2005,withintheframeworkofwhich:
- inCo-operationwiththeNetherlandstaxandcustomsadministrationandDanish
customs and tax administration implementation of the Twinning project was
completed;
- five agreements were concluded – On Establishment of Thematic Checks Support
IT system, On Establishment of Information Exchange system, On Supply of
Fraudulent Transaction Chain Visualisation program, On supply of lap-top
computersandOnsupplyoflicenceforinternationaldatabaseAmadeus.
Documentation regarding Phare national program Twinning Light project
„Provision of exchange of information in accordance with requirements of the EU
directives77/799/EECand79/�070/EECandOECDConventiononMutualAssistance
inTaxMatters”inordertoprovideorganisationofqualitativeexchangeofinformation
inelectronicformwasapprovedinSeptember2005.
SRS Financial Police Department has entered into closer co-operation with
EuropolandtheEuropolNationalUnitoperatingunderthesupervisionofLatvianState
Police.Withintheco-operationframeworkwithEuropol,FinancePoliceDepartment
INTERNATIONAL COOPERATION
73
INTERNATIONAL COOPERATION
was involved in the member states’ competent authorities expert working group,
establishedwithin the frameworkof theprogram „Hague”, developedbyEuropean
Commission and Europol, prescribing strategy for prevention of organised crime,
strengthening the prevention instruments in connection with organised crime financial
aspects. One of the prevention instruments prescribes development of unified minimal
training standard for all the member states in combating of crimes in financial area for
theperiodbetween2005and2007.
Active participation in program Customs 2007 subprogram Exchanges was
initiatedin2005,byestablishingcontactswiththeprogramExchangeco-ordinators
fromthecustomsservicesofothercountries.Withintheframeworkoftheprogram
exchangeofexperiencehastakenplaceintheareaofdoghandling,areaofphysical
control, on work with scanners, on protection of intellectual property rights and
On implementationandutilisationof security electronic control system.Within the
frameworkof subprogramExchangeof theprogramCustoms2007exchange trips
for 23 officials from the SRS were organised to Lithuania, Finland, Italy and Hungary.
Withinthesamesubprogram�2customsexpertsfromFinland,Lithuania,Italy,Czech
ReplicaandSwedenwerereceived.
Activeparticipation inEuropeanCustomssportsassociation,memberofwhich
Latviaissince2004,wascommencedin2005.EuropeanCustomsSportsassociationis
aninternationalorganisation,establishedin�992consistingasoftodayof�7member
states(Belgium,CzechRepublic,Cyprus,Denmark,Finland,France,Hungary,Ireland,
Italy,Latvia,Lithuania,Luxembourg,theNetherlands,Poland,Slovakia,Swedenand
GreatBritain).Themain ideaoftheorganisation istostrengthenthetiesbetween
theEuropeancustomsadministrations,thuspromotingandorganisingmutualsports
activities.Until now representatives fromLatvian customswith good successhave
participatedincompetitionsfordoghandlers.In2005representativesfromLatvian
customs for the first time participated in shoot competition in Czech Republic. Latvian
and Finish customs friendly hockey match was organised for the first time parallel to
activeparticipationinactivitiesofEuropeanCustomssportsassociation.
74
STATE BUDGET FINANCING AND THE EXPENDITURES
Underthelaw“OnStatebudgetforyear2005”SRShasusedthestatebudget
grants and foreign financial assistance funds according to approved cost estimates and
financing plans. A system of internal control of financial funds, economic transactions
and projects realised by SRS, is established and it ensures efficient and cost effective
useofavailableresources.
Total state financing allocated and the expenditures
No.
Financial resourcesActual perfor-
mance in 2004
Year 2005 (Ls)
Under the lawActual
performance
1. Financial resources to
stand the costs (in total)
71 504 660 70 463 296 68 722 532
�.�. Grants 6�4529�8 640�45�3 640�45�3
�.2. Paidservicesandotherown
revenues
34�696� 4��8320 3454464
�.3. Foreign financial assistance 663478� 2330463 �253555
2. Expenditures (in total) 70 944 777 70 534 614 68 007 151
2.�. Maintenanceexpenditures
(Itotal)
55809925 64498473 62757768
2.�.�. Donationsandgrants,
includingcontributionsto
internationalorganisations
8930439 ��5�65�7 ��468273
2.�.2. Othermaintenance
expenditures
46879486 5298�956 5�289495
2.2. Expendituresforcapital
investments
�5�34852 6036�4� 5249383
BUDGET INFORMATION
75
BUDGET INFORMATION
STATE INVESTMENT PROGRAMS
The breakdown of the financing used during the year 2005 within the frame-
work of State investment program project OP 03 „Customs points on the
borders”
ObjectAllocated
resources (Ls)
Spent
allocations (Ls)
Construction, construction and author’s supervision of
Šķirotava railway customs control post
�435670 �2487�5
Design,construction,constructionandauthor’ssupervision
of railway weighs for Šķirotava railway customs control post
347847 62204
Renovation of SRS building in Rēzekne, Maskavas street 30 �23773 77440
Design,construction,constructionandauthor’ssupervision
of the oil products inspection ramp at Rēzekne commodity
stationCCP
�09760 2362�
Constructionofradiationmeasurementequipmentforthe
CPPRigafreeport;projectdevelopmentforconnectionof
diesel generator to the office building of the SRS Customs
board
998 2080
Investments in total in 2005 2 018 048 1 414 060
Intheyear2005withintheframeworkoftheStateinvestmentprogrammeproject
OP 03 “Customs points on the borders” construction of customs control post “Šķirotava”
wasstarted,termforcompletionofwhichisMay3�,2006.Contractonconstructionand
installation of automatic railway weighs at the customs control post “Šķirotava” was
concluded.Finaldateforcompletionofweighs’constructionisJune22,2006.Realisation
ofthebothabove-mentionedactivitiesisforeseenwithintheframeworkofPhareproject
LE0�04.0�“Inspectioninfrastructureatseaportsandrailroadbordercrossings”.
Intheyear2005withintheframeworkofthesameStateinvestmentprogramme
project OP 03 “Customs points on the borders” renovation of the SRS building in Rēzekne,
Maskavasstreet30hasbeencommencedandtakesplaceinordertoestablishcustoms
clearancecentre.DateforterminationoftherenovationworksisMarch�,2006.
In the year 2005 construction of oil products inspection ramp at Rēzekne
commoditystationofcustomscontrolpostwascommenced.Dateforterminationof
theconstructionworksisMarch22,2006.
76
OTHER PROGRAMMS
Information on expenditure of funds of the projects implemented within the
framework of Phare program (Ls)
Phare project title
Foreign financial
assistance fundsNational co-financing Spent in-
totalallocated spent Allocated spent
2003/004-979-08-02“Staterevenue
servicetaxcontrolimprovement”
�43284 738 233�4 �3065 �3803
2002/000-590-02-0�“Marketsurveil-
lancesysteminnon-foodarea”
605��
2002/000-590-�2-02“Provisionof
exchangeofinformationinaccor-
dancewithrequirementsoftheEU
directives77/799/EECand79/�070/
EECandOECDConventiononMutual
AssistanceinTaxMatters”
90803 67243 �0089 9397 76640
2002/000-590-��-0�“Strengthening
oftheadministrativecapacityof
customsbyimplementingthe
CustomsBusinessStrategyandthe
EUcompatiblecustomsdatabases”
�424287 698�45 98893 98893 797038
2003/004-979-08-0�“Integrated
tariffmanagementsystemandrisks
assessment”
24900� 246655 �9290 �526� 26�9�6
2003/004-979-02-04“Protectionof
IntellectualandIndustrialProperty
Rights”
89�86 72945 9790 9782 82727
2003/004-979-03-0�“MarketAd-
ministrationSystemforAgricultural
Products”
84336 5��6 44�2 44�2
LE0�.04.0�“Developmentofcus-
tomsinfrastructureatseaportsand
railroadbordercrossings”
20�8048
(investment)
�4�4060
(investment)
�4�4060
BUDGET INFORMATION
77
BUDGET INFORMATION
LV/2003/IB/FI/02-TL“Post-clear-
anceAuditReinforcementproject”
93473 72249 9�37 9002 8�25�
LV/2003/IB/FI-08TL“Improvementof
theCustomsAnalyticalWork”
95582 9558� ��948 7303 �02884
In total 2 330 463 1 253 556 2 205 625 1 581 175 2 834 731
78
Quantitative composition of the personnel
Inyearalltogether5349,5staffunitswereplannedintheStateRevenueService
in 2005, including 4 435 officials and 914,5 employees. At the end of 2005 there were
actually 5 019 officials and employees, respectively 4 136 officials and 883 employees
employedinSRS,andofthem3487or69,5%ofallthepersonsemployedbySRSand
�532or30,5%ofallthepersonsemployedbySRSaremen.
Breakdown of personnel per age groups has not significantly changed in 2005 as
comparedwiththeyear2004.Attheendof2005outof50�9personsemployedby
theSRS�383wereattheageupto30years,�387–aged3�to40,�238–aged
4�to50,557–aged5�to55and454–56yearsandabove.
PERSONNEL
Comparisonbetweenthenumbersoftheplannedstaffunitsandactuallyemployedemployeesandofficials
Planned
Actual
5�484963
5350
50�9
4600
4800
5000
5200
5400
2004.g. 2005.g.
Breakdownofpersonnelperagegroups
upto30years
3�to40years
5�to55years
55yearsandabove
4�to50years
25%28%
27%9%
��%
79
PERSONNEL
Education level of Staff
In2005 theproportionof theemployeeswithhighereducationhas increased
from75%in2004to82%in2005.Accordinglytheproportionoftheemployeeswith
secondaryorsecondaryspecialisededucationhasreduced.Attheendof20054�26
employees and officials at the SRS had higher education (three persons acquired
doctor’sdegree,435–master’sdegree),400–havesecondaryeducationand493
secondary specialised education. ��09persons are continuing their education at a
higher education level, out of which five continued their studies for doctor’s degree,
and243–toacquiremaster’sdegree.
3626 employees and officials in 2005 attended different qualification courses
intheareasofcustomsissuesandtaxadministration,coursesforITadministrators
andusers,aswellasothertypesofcoursesorganisedbytheStateAdministration
School.
Length of service at SRS
1 118 employees and officials (as of January 2, 2006) have worked at SRS for
more than five years and 1 873 more than 10 years. Compared to the indices at the
beginningoftheyear2005,numberofemployeeswhohaveworkedatSRSmorethan
five years is decreasing (from 1 552 to 1 118 persons), and the number of employees
whohaveworkedmorethan�0yearsisincreasing(from�376to�873).
EducationlevelofSRSpersonnel
HighereducationSecondaryeducationSecondaryspecialeducation
82%
8%�0%
80
Personnel turnover
In 2005 708 employees and officials were taken on at the State Revenue Service.
65�employeeterminatedtheiremploymentwithSRS.Comparedtotheindicesofthe
previous year number of employees and officials terminated their employment with
SRS upon employee’s initiative has significantly increased. Number of the employees
terminatingtheiremploymentwithSRSupontheemployer’sinitiativeisdecreasing.
In2005527employmentswereterminatedupontheemployees’initiative(in2004
– 366 employees and officials), and the number of employments terminated upon the
employer’s initiative is 112 employees (in 2004 – 496 employees and officials). In
2005sixemploymentswereterminatedduetotheemployee’sdeath.
Personnelturnoverindicatorin2005intotalis�2.6%,thoughinsometerritorial
offices the indicator exceeds even 20 %.
Disciplinary punishments
AlotofattentionatSRSisfocusedonthequalityofworkandthecompliancetothe
rulesofworkprocedure.On-jobinspectionsarecarriedoutatSRSandunfortunately
in the result violations are discovered. However recently a positive tendency can
be observed, where amount of disciplinary punishments applied to the employees
remarkablyreduces.
Disciplinarypunishmentswereappliedforviolationsinrelationto89employees,
which is84cases, lessthan in2004,whenthenumberreached�73cases.Outof
thesethedisciplinarypenaltiesin200566wereappliedinrelationtoemployeesand
officials of SRS territorial offices (19 employees from SRS Latgale regional office, 14
– Riga regional office, 13 – Riga Customs regional office, 4 - Vidzeme regional office
and 3 – Kurzeme regional office) and 23 in relation to employees and officials of the
centraladministration(9–Financepolicedepartment,6–CustomsBoard,3–Excise
goodsdepartment,3–Legaldepartmentand2–CustomsCriminalBoard).
PERSONNEL
8�
PERSONNEL
Typesofapplieddisciplinarypunishment
8�
56
22
59
28
4�
�0
0
�0
0
20
40
60
80
�00
2004.g. 2005.g.
Warning
Reprimand
Wagereduction
Positionreduction
Dismissalfromtheposition
82
Consultation, Information and Education of Taxpayers
Topromotevoluntarycomplianceandhelptaxpayerstopaytaxesinaccordance
withtherequirementsdeterminedbylegalprovisions,agreatnumberofmeasureswere
carriedoutin2005intheareaoftaxpayers’consultation,informationandeducation,
utilisingalltheavailablecommunicationaidsandtechniquesforcommunicationwith
taxpayers.
Asmanyas43�3�2consultationswereprovidedtothetaxpayersinthesphere
of theapplicationof tax legalprovisions in2005,which isby��,4%more than in
2004.Mostofall fromall thegivenconsultations–47%-havebeengivenorally.
Thenumberoftheconsultationsgivenelectronicallyhasincreasedveryrapidly–by
59%morethanin2004,meaningthatitisthemostconvenientwayfortaxpayersto
receivetheanswerstotheirquestions.
Taxpayershavemade34636callsin2005viacentralisedcallcentreintheissues
of tax administration (phone number 72��0��). The most essential questions of
taxpayerswererelatedto:
- personalincometax(8�52or23,5%);
- valueaddedtax(6904or�9,9%);
- tax administration and rights and responsibilities of taxpayers (5 79� or
�6,7%);
- mandatorypaymentsofstatesocialassurance(2200or6,4%);
- way-bills-accounts(�055or3%).
TheSRShasorganised�435seminarsabouttheapplicationoftaxlegalprovisions
in 2005 for taxpayers, professional organisations and other state and municipal
institutions.Intotal,theyhavebeenattendedby38456participants.4923students
ofdifferenteducationinstitutionshavebeentrainedin�82seminars.
In2005asmanyas60942consultations(�799electronically,234�6byphone,
35977orally)wereprovidedontheissuesatthecompetenceoftheSRSrelatedtothe
implementation of the law „On Prevention of Conflict of Interest in Activities of Public
Officials” to state officials, directors of institutions and other interested persons; it is
for22906consultationsor60%morethanin2004.298�informative,reminderor
warninglettersweresentout,�05consultationsorseminarshavebeenorganisedon
thespotininstitutions.
SRS AND SOCIETY
83
SRS AND SOCIETY
The SRS has provided �0 9�7 consultations on customs issues in 2005. The
divisionoftheconsultationsbytypes:
- traderegimesandoriginofgoods–�562;
- TARIC/QUOTA–�923;
- customsproceduresandregimes–�968;
- customspayments–2575;
- declaring(processingofsingleadministrativedocument)–�4�9;
- customsdebtandguarantees–265;
- otherissuesinthesphereofcustoms(organisationofcustomswork)–829.
Since June, 2005 the new Latvian language version of the SRS web site
www.vid.gov.lvisavailablefortaxpayersthat,incomparisontotheprevious,ismore
userfriendlyandcanbeusedmoreeasily.InformationintheSRSwebsiteisbeing
regularly updated and supplemented, the opportunity has been created to send a
question for theSRSexperts, participate in discussions, apply for news and other
up-to-dateopportunities.
Thefollowinginformativematerialshavebeenissuedin2005:
- booklet„WhatHasToBeKnowntoReceivetheRepaymentofPersonalIncome
Tax for Justified Expenses”;
- booklet „Who Has Obligatory Submit the Annual Income Tax Return by April
�?”;
- booklet„CargoControlbyMeansofIonisingRadiationFacilitiesontheBorderof
theRepublicofLatvia”;
- booklet„InformationonExciseTaxRatesintheRepublicofLatvia”;
- booklet„RegistrationofTaxpayers”;
- booklet „TheAccountingof IncomeandExpenditureof thePayersofPersonal
IncomeTax”;
- leaflet „Application of Value Added Tax to Transactions in the EU territory”;
- leaflet „Natural Resources Tax” ;
- leaflet „The European Union Customs Tariff Reliefs – Tariff Quotas”;
- leaflet “What Has To Be Known About Customs Audit”;
- leaflet “Latvian Customs”.
84
Advisory Council of Customs and Businessmen
Theco-operationwithtraders,thatbegunalreadyin2004,continuedactivelyin
2005.TheSRSorganisesregularthemeetingsofCustomsandBusinessmenAdvisory
Council where the representatives from different professional businessmen unions
andassociationsoftrade,industry,transport,logisticsandotherspheres,aswellas
responsible officials from Ministry of Finance and the SRS are invited to participate.
Theissuesrelatedtocustomsworkandacuteforbusinessmenarebeingdiscussedin
meetings.Thebusinessmenareinvitedtosendbeforethemeetingstheirquestionsto
receivecompetentanswersinpresenceduringthemeetinganddiscusscurrentevents
withcustomsexperts.
To ensure the availability of information about the work of Customs and
BusinessmenAdvisoryCouncil,sincethemiddleof2005theinformationregularlyis
beingpublishedinseparatechapterintheSRSwebsiteaboutforthcomingmeetings,
agendaofmeetings,protocolsofmeetings,presentationsgivenwithintheframework
ofmeetingsandotherinformativematerials.
To inform businessmen about the changes in legal provisions in the sphere
of customs affairs, the SRS regularly – once in a month – send electronically to
businessmenabulletinwheretherehasbeensummarisedtheinformationaboutthe
acuteissuesandchangesofpreviousmonthcarriedoutinnationallegalprovisions
regulatedbycustomsaffairs.
Researches carried out
The SRS purposefully strengthens the position – to develop as the service
institution,theorganisationdirectedtowardstheclientthatisavailable,encouraging,
convenientandreliabletotaxpayers.TheSRSworksalottoaccomplishstepbystep
and persistently one of the prior objectives – to ensure qualitative service. To find out
theopinionoftaxpayers,theSRSconstantlycarriesoutthesurveysofpublicopinion.
In 2005 the SRS organised one survey of public opinion to find out the point of
viewofthesocietyabouttheimageoftheSRS.FromNovember��-2�,2005,�0��
inhabitantsatage from�8 to74yearshavebeenpolled indirect interviews inall
regionsofLatviaintheirlivinglocations.
SRS AND SOCIETY
85
SRS AND SOCIETY
Theresultsofthesurveywitnessthattheinhabitants,whohadcontactwiththe
SRS,evaluatemorepositivelytheserviceoftheSRSthantheinhabitantswhodidnot
havedirectcontactwiththeSRS.
The great majority of the participants of the survey confessed that the SRS
functionsandtasksarecomprehensible.ThesocietybasicallyassociatestheSRSwith
theworkoftaxadministrationandcustoms.Bygrowingpossessionofinformation
abouttheSRS,thecommonattitudebecomesmorepositive.Itshouldbenotedthat
theinformationabouttheSRSinsocietymostofcases–70%ofinquiredrespondents
–comesfrommassmedia.
ThereisstillnotanimpeccableimageabouttheSRSinthepublicopinion,though,
thereisagreatnumberofthingsthatarebeingevaluatedpositively–taxcontrol,
workofcustoms,competenceofexpertsandknowledgearebeinghighlyevaluated.
Alongwith positive things, there appear problems that are being indicated by the
inquired respondents – bureaucracy, queues and deficiency of different explanations.
Analysingtheresultsofthesurvey,itshouldbeconcludedthattheprogression
oftheSRStotheserviceinstitution,theorganisationdirectedtowardstheclient,has
beennoticed.Itiswitnessedbythefactthatmajorpartoftheinquiredrespondents
would not be worried by the invitation to come to tax office.
86
Priorities
Priorities in the sphere of tax administration:
- continue to develop the work of consultation, information and education of
taxpayersinissuesoftheapplicationoflegalprovisions;
- encourage taxpayers to theopportunity to submit tax returnsasprovided for
by legal provisions, to file reports or tax assessments in electronic format with
electronicsignature,usingtheElectronicdeclarationsystem;
- introduce Audit support information system in work of the SRS tax control,
developthematicchecksupportinformationsystem;
- pay special attention to measures for the restriction of non-registered
entrepreneurship;
- selectingtaxpayersfortaxcontrolmeasures,prioritywillbegiven:
• tothecontrolofVAT,focusingontaxpayerswhohavedevelopednegative
differencesofdeclaredtotalbusinessvalueagainsttheinformationdeclared
intaxreturnsbybusinesspartners,andtaxpayerswhocarryouttransactions
intheEUmemberstates;
• tophysicalpersonswhoseexpensesexceedthedeclaredincome;
• totaxpayersthathaveariskthatonlyapartfromtheworksalarypaidto
employersistaxedorisnottaxedatall.
Priorities in the sphere of customs affairs:
- strengthen the customs administrative capacity, developing and gradually
introducing the following customs information systems – „Integrated Tariff
Management System”, „The System of Administration of Agricultural Goods’
Market”, „Automatic Identification System of Vehicles and Containers”;
- implementing theEUE-Customs initiative, tocontinueworkonExportcontrol
system and introduction of Import control system, thus, ensuring in future
electroniccustomsdataexchangebetweenmemberstatesinco-operationwith
othercustomsservicesoftheEU;
- develop the analytical work of customs and ensure efficient risk management to
promotethedetection,combatingandpreventionofcustomsoffencesoninternal
andexternalbordersoftheEU;
PLANS FOR 2006
87
PLANS FOR 2006
- implementingthemoneyresourcesallocatedwithintheframeworkoftheproject
of Schengen Facility finance program, equip Customs Control posts of the Republic
ofLatviawithtechnicalfacilitiesandequipmentnecessaryforqualitativework,
aswell aspurchase20 drug-detectiondogs thatwill be trained in searching
drugs;
- continue active co-operation with the EU institutions and ensure sufficient
participation of Latvian customs representatives in development co-operation
projects and in work of the EU institutions in the sphere of unified EU customs
legislationdevelopment.
Priorities of the SRS Customs Criminal Board:
In2006theSRSCustomsCriminalBoardcarriesoutwork inaccordancewith
„PreventionandCombatingStrategyofSmugglingoftheSRSTerritorialInstitutions
for2005-2009”(hereinafter–strategy).Intheactionplanof2006developedaccording
tothisstrategythefollowingprioritiesofoperationaredetermined:
- combating drug trafficking;
- combatingorganisedcrime.
Priorities of the SRS Finance Police Department:
- combatingorganisedcrime;
- combatinglegalisationofillegallyobtainedmoneyresources;
- combatingtaxfraud;
- combatingcriminaloffencesthatarerelatedtothepaymentof„envelopesalaries”.
Priorities of the SRS Excise Goods Department:
- in thesphereof thesupervisionofexcisegoodsmovement–supervisionand
controloftheutilisationofexcisetaxguarantees,aswellasthesupervisionofoil
products(fuel),includingthequalityofbio-fuel;
- monitoringoftheestablishmentofoilproducts’reserves;
- establishment of information analysis systemof excise goods’movement risk
intheSystemofDatastoragetoensuretheoperationof informationanalysis
system movement risk of alcoholic drinks, tobacco products and oil products
(fuel)intheSRSstructuralunits;
88
- new functions – implementation of certification of small constant breweries along
withexistinglicensingprocedures.
Priorities of the SRS Corruption Detection Department:
- improvementofco-operationwiththeSRSstructuralunitsincontrolofincome
legitimacy of state officials;
- promotion of electronic submission of tax returns of state officials and lists of
state officials.
Priorities of the SRS Finance Department operation:
- optimisation of money flow control system to ensure operative management of
financial resources allocated to budget and minimise well-timed non-assimilation
risk of the allocated financing;
- implementationofcontrolmeasuresintheSRSterritorialinstitutionstoanalyse
the co-ordination process management of changes of financing allocated to the
budgets of the SRS territorial institutions that further would ensure the unified
development of co-ordination system of changes of financing allocated to the
SRSbudget;
- improvementofmethodicalmanagementandoptimisationofco-operationwith
the finance employees of the SRS territorial institutions.
PLANS FOR 2006
89
PLANS FOR 2006
Financial commitments
Financing allocated to Phare program, Transition facility assistance program
and Schengen Facility financing program projects for 2006 (Ls)
Title
Financ-
ing plan
of foreign
financial as-
sistance
Co-financing
from state
budget
Plan in total
Projects of Phare program
2003/004-979-08-02 „Improvement of State Revenue
ServiceTaxControl”
686743 2�8�09 904852
2003/004-979-08-0� „Integrated Tariff Management
SystemsandEvaluationofRisks”
�94953� 6427�4 2592245
2002/000-590-��-0� „Strengthening of Customs Ad-
ministrative Capacity, Introducing Customs Strategy
andtheEUMutuallyCompatibleDataBases”
744724 4�476 786200
2003/004-979-03-0�„TheEstablishmentofMarketAd-
ministrationSystemofAgricultureProducts”
�37046 20733 �57779
LV/2003/IB/FI-08TL„ImprovementofCustomsAnalyti-
calWork”
23895 23895
LV/2003/IB/FI/02-TL „Improvement of Post-clearance
controls”
�8063 �8063
2003/004-979-02-04„ProtectionofAuthor’sRightsand
IndustrialPropertyRights“
�7838 �7838
Total 3577840 923032 4500872
Transition Facility assistance program project
TF2004“StrengtheningofFraudCombatingControl” 666785 262269 929054
Financing program of Schengen Facility
FinancingprogramofSchengenFacility 2303�0 2303�0
90
Financing (Ls) allocated to prior activities of the State Revenue
Service in 2006
Title of prior activityFinancing allocat-
ed to prior activity
Additionally allocated
staff units
Introductionofthelawofbio-fuel 2�7367 9
Ensuring controls of personal income tax returnsand
acquisitionoftechnicalequipment
3000000 �03
Increaseofminimummonthlysalaryfrom80Lsto90Ls �906
ImprovementoftheinfrastructureoftheStateRevenue
Serviceinformationsystem
9�8525
IncreaseoftheStateRevenueServicecapacity 3850722 24
Strengtheningofcustomsadministrativecapacity 325000
Refundofexcisetaxondieselfueltofarmers 6655762
International projects
- ItisintendedtocompletetheimplementationofIntegratedtariffmanagement
systemin2006intheEuropeanUnionPhareprojectNo.2002/000-590-��-0�
„StrengtheningofCustomsAdministrativeCapacity,IntroducingCustomsStrate-
giesandMutuallyCompatibleDataBasesoftheEuropeanUnion”;
- RiskinformationmanagementsystemwillbedevelopedtillNovember30,2006
intheEuropeanUnionPhareprojectNo.2003/004-979-08-0�„IntegratedTariff
ManagementSystemandRiskEvaluation”;
- Data exchange system between the SRS and Rural Support Service will be
developed till November 30, 2006 in the European Union Phare project No.
2003/004-979-03-0�„TheEstablishmentofAdministrationSystemofAgricultural
Goods’Market”;
- StateprocurementprocedureandworkonthedevelopmentofAutomaticidentifying
systemofvehiclesandcontainerswillbeorganisedin2006intheEuropeanUnion
Transition Facility 2004 program project No. 2004/0�6-998 „Strengthening of
FraudCombatingControlSystemontheExternalBorderoftheEU”;
- theEUPhareTwinningLightprojectNo.LV/2003/IB/FI-08TL„Improvementof
Customs Analytical Work” will be finished in May of 2006, the objective of which is
PLANS FOR 2006
9�
PLANS FOR 2006
to develop the analytical work of customs and ensure efficient risk management
to promote detection, combating and prevention of customs offences on the
internalandexternalbordersoftheEU;
- Workwill be completed on the construction of CustomsControl Post inMay of
2006 in Šķirotava railway station in Riga, that is provided in the European Union
Phareproject„CustomsControlInfrastructureinPortsandonRailway”andisbeing
co-financed in State Investments’ program OP 03 „Customs Posts on Borders”;
- participationintheeventsoftheEUCustoms2007program,moreactivelyutilising
theopportunitiesofCustoms2007programinthesub-programofExchangeand
inthesub-programofBenchmarking;
- implementing the tender No.� „Purchase of Technical Equipment within the
Framework of Schengen Facility Finance Program” of Schengen convention finance
program project No. VID/1/6 „Increase of the Efficiency of Persons and Their
BelongingsControlonExternalBorder”,in2006therewillbepurchasedradios,
computertechnique,photo,audioandvideotechnique,roentgenfacilities,tests
for identification of drugs, night vision devices, communication facilities and other
technicalequipment;
- implementing finance program project No. VID/2/7 „Purchase of Drug-detection
Dogs”ofSchengenFacility,in2006itisplannedtocarryouttheprocedureof
statepurchaseandsign theagreementon thepurchaseof20drug-detection
dogsthatwillbetrainedonsearchingdrugs;
- implementingtheEuropeanUnionE-Customsinitiative,in2006theworkwillbe
continuedonensuringtheimplementationoftherequirementsoftheRegulation
(EC) No. 648/2005 of European Parliament and Council accepted in April �3,
2005(amendmentsofTheCodeofCommunityCustomsinthesphereofsafety
thatprovidesthesubmissionofthepre-arrivalandpre-exporttaxreturns,the
conception of Acknowledged merchants and the establishment of Community
RiskManagementSystem), according to theEUPhareprojectNo. 2003/004-
979-08-0�„IntegratedTariffManagementSystemandtheEvaluationofRisk”in
2006therewillbecarriedouttheworkontheimplementationofthegovernment
purchaseNo.FMVID2005/628„DevelopmentofExportControlSystemforthe
Requirements of the SRS”, it is planned to start work on the introduction of
ImportControlSysteminLatvianCustomsin2006.
92
Planned researches
Itisplannedtocarryoutthefollowingresearchesin2006:
- Survey of target groups about the level of awareness of taxpayers and
understandingaboutElectronicdeclarationsystem;
- Quantitativesociologicsurveyaboutthequalityoftaxpayers’service;
- Quantitativesociologicsurveyaboutthequalityofcustomsclients’service;
- QuantitativesociologicsurveyontheSRSimageinsociety;
- SurveyoftargetgroupsontheSRSimageinsociety.
PLANS FOR 2006