The State Revenue Service (SRS) will receive information from credit institutions and payment service providers on cash transactions at ATMs above 750 euros per transaction, reports the Ministry of Finance (MoF).
The Ministry also points out that this requirement will not apply to purchases made in shops, therefore the shop will not have to report anything if a person buys an expensive TV or computer in cash. Similarly, the payment of e.g. utility bills will not be in the focus.
Implementing the measures of the Shadow Economy Reduction Plan, the MoF has drafted and on the 20th of August submitted for discussion the draft Law Amendments to the Law on Taxes and Fees. The initiative aims to increase the transparency of cash flows by focusing on the frequent use of large amounts of cash, which would help to detect illegal cash transactions.
The MoF notes that despite the fact that the proportion of non-cash payments is steadily increasing, many people still use cash as a convenient payment method, which is not inherently bad or wrong. At the same time, cash is often used as a tool for shadow economy activities.
The data compiled show that cash deposits at ATMs in Latvia in 2023 amounted to more than 2.1 billion euros, while withdrawals – more than 4.6 billion euros.
The larger the cash flow in the economy, the easier it is to hide the shadow economy in the legal cash flow.
Therefore, the MoF aims to gain more transparency on those cash deposits and withdrawals that are higher than average, in order to be able to identify cash transactions of illegal origin in the overall flow, the ministry explains.
The planned amendments also provide for supplementing the information on the turnover of individuals’ accounts already reported to the SRS by credit institutions and payment service providers, by adding a separate position for cash transactions.
The SRS currently receives information on individuals whose accounts in the previous year had a turnover of more than 15 000 euros. The planned amendments foresee that credit institutions and payment service providers will be obliged to provide information to the SRS in addition to the currently provided data if the total amount of cash deposited in the previous year is 7 000 euros or more.
The MoF explains that the disclosure of such information to the SRS does not automatically mean that the person will be placed under special supervision. This information will be assessed in conjunction with other information available to the SRS. Persons will be contacted in cases where they have a significant discrepancy between their income and expenditure. Identifying such discrepancies does not necessarily mean that the person is evading tax. It may be that the person has not declared taxable income, and the SRS will help the person to understand the situation and sort it out.
For legal persons with an annual turnover of more than 50 000 euros per year, the amendments impose an obligation to provide customers with the possibility to pay for services and retail transactions also in non-cash money, if the customer wishes to pay this way.
The current rules require taxpayers to make only non-cash payments, including by payment card, in the wholesale trade. According to the Law on Taxes and Duties, wholesale trade is the sale of purchased goods on one’s own behalf to an operator for resale, for production or for the purpose of one’s own activity.
Thus, the planned regulation will affect service providers and retailers, who, in addition to the existing cash payments, will have to provide their customers with the possibility to make non-cash payments as well, the MoF points out.
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