Viesturs Burkans, chief of the Latvian anti-money laundering service, saidit was still difficult to forecast exact figures, but that the number oftax fraud schemes was certain to grow as a result of the measure. "Iexpect the issue to exacerbate and take more resources of the [moneylaundering] control service," the officer said.
In his words, already now about half of all fraud cases that the controlservice had sent to the financial police for investigation concerned taxfraud schemes.
The Latvian government has decided to increase the basic VAT rate to 21 percent from the present 18 percent, andthe reduced VAT rate to 10 percent from 5 percent. Moreover, a number ofgoods and services that so far fell in the reduced VAT category will nowbe included in the basic rate category. These include the media and presssubscription fees, as well as commercial TV and radio subscription.
The VAT rates are being raised as part of the Latvian economicstabilization program that has been worked out in cooperation withinternational financial institutions that might provide loans to Latvia.