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Latvia limits cash transactions to 7,200 euros to fight shadow economy

Xinhua, September 20, 2016 Adjust font size:

Aiming to fight the shadow economy, the Latvian government on Tuesday decided to ban individuals from carrying out cash transactions worth more than 7,200 euros (8,046 U.S. dollars).

The ban is stipulated in amendments to the law on taxes and duties approved by the government. The amendments will be submitted to the parliament.

The amount of fines applicable to individuals who violate the new provision in the law will be specified later.

The finance ministry explained that one of the key aspects of the shadow economy is unlimited cash transactions which are very difficult to track. Shadow economy distorts competition because businessmen who evade taxes or only pay part of taxes obtain unfair advantage as compared to honest taxpayers. That is why the government continues to work on new measures to reduce the shadow economy in Latvia, the ministry said.

The law also includes a transitional period. The new provision will apply to cash transactions in the said amount settled after Jan. 1, 2018, if such transactions are stipulated in contracts signed before Jan. 1, 2017.

The limitation of cash transactions to 7,200 euros already applies to companies and legal entities, but not to private individuals. Endit