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Business Environment
The government and local authorities, through cooperation with various business organisations, are committed to further improving the legal and administrative environment for foreign and local business ventures wishing to establish themselves in the country, by a number of methods and means. As an example, the standard rate of Corporate Income Tax from January 2004 is reduced to 15%.
Start-up Assistance
Company registration procedures in Latvia are fast and streamlined, allowing for the establishment of a business within two business days;
Preferential work and residence permit formalities for key company personnel (for detailed information see in section on Entry, Residence and Work Permits).
Location, establishment and local networking guidance provided by the Investment and Development Agency of Latvia, regional development agencies and local authorities.
The State Support Programmes and Grant Schemes
The government of Latvia has been developed state support programs for the enterprises registered in Latvia. The state support programs were co-financed from EU structural funds.
In order to apply for grants, enterprises needed to prepare and submit projects accordingly to criteria, detaily described in guidelines for project announcers.
Additional information at:
www.esfondi.lv
www.liaa.gov.lv
www.vraa.gov.lv
www.lad.gov.lv
www.nvd.gov.lv
Improvement of the Business Environment in Latvia
Information of the Improvement of the Business Environment in Latvia
Latvia is ranked among the top countries worldwide in terms of business start-up time, according to the recently published World Bank report Doing Business 2005 (Oxford University Press), which analyses business regulation in approximately 130 countries across the globe (rru.worldbank.org).
Background
Until 1998, the impact of administrative and regulatory procedures upon business environment in Latvia was not consistently monitored. As a result, complaints arose from both foreign investors and local entrepreneurs about recurring problems in conducting business, e.g., unclear immigration procedures for foreign citizens, delays in transferring property rights, burdensome and unmotivated visits of government inspectors, unnecessarily large number of permits for construction approval etc.
Evaluation and Research
In order to address these issues, the Ministry of Finance and Investment and Development Agency of Latvia (LIAA) commissioned a Study on Administrative Barriers to Investment in Latvia, prepared by the Foreign Investment Advisory Service (FIAS) of the World Bank. The Study analyzed and critically evaluated many problems, related to employment, immigration, taxation, customs, purchase of real estate, construction, inspections, and other issues of importance to entrepreneurs.
Please find the full report of the previous self – assessment exercise in Latvia by clicking on the link below:
Self – assessment exercise (FIAS REPORT April 1999.doc)
Management of Reforms
To initiate an open discussion about the problems identified in the FIAS study, LIAA invited business representatives and government officials to the presentation of the Study. The Prime Minister established a Steering Group to seek solutions to the issues identified in the Study. Steering Group, using both the recommendations from FIAS and suggestions from the subcommittees on specific questions, developed the first Action Plan to Improve the Business Environment in Latvia.
Steering Group
The Steering Group is established by decree of the Prime Minister. It is composed of leading civil servants of Ministries of Economy, Finance, Justice, Regional Development and Local Government, as well as heads of government agencies responsible for implementation of the Action Plan. The Steering Group has since become institutional. It meets regularly in order to monitor the progress of reform implementation.
Action Plan
On May 11, 1999, the Cabinet of Ministers adopted the first Action Plan. The Plan is an inter-ministerial planning document, summarizing the formulation of problems, specific tasks to be undertaken in order to solve the problems, responsible institutions, implementation deadlines and performance indicators. LIAA is assigned the task to supervise the implementation of the Action Plan and institutionalize the dialogue between the investment community and government.
The Action Plan is based upon the “cycle of reforms” consisting of:
1) Identification of problems;
2) Dialogue between government and business community;
3) Decision-making;
4) Assessment and evaluation of impact.
The Plan includes amendments to legal acts, revision and simplification of procedures, improvement of co-ordination among different institutions, preparation and publication of information as well as training of state officials. The Plan is a "live" document, as it is regularly updated by including new items and deleting those that have been implemented.
The most significant results since 1999 have been achieved in the areas of enterprise registration, tax administration, inspections, customs and border-crossing, construction, real estate as well as expatriate residency.
The latest Action Plan to Improve the Business Environment in Latvia was adopted by the Cabinet of Ministers in June 7, 2007.
To view the implemented Action Plan to Improve the Business Environment in Latvia, please click below:
Summary of the Action Plan to Improve the Business Environment as of 1 January until 31 December 2007
Action Plan to Improve the Business Environment as of 1 January until 31 December
Dialogue between Public and Private Sectors
Simultaneously with the efforts to eliminate barriers to investment in Latvia, another important initiative has been implemented. Foreign Investors Council in Latvia (FICIL), formed by the executives of foreign companies operating in Latvia, organizes annual High Council meetings with the top government officials. The Prime Minister, Minister of Economics, Minister of Finance, Minister of Justice, Minister of Foreign Affairs and other officials take part in these High Council meetings, interacting with the investors, who represent a cross-section of businesses and countries. The recommendations of FICIL are incorporated in the Action Plan and serve as a tangible contribution to the improvement of the business environment in Latvia. Previous High Council meeting between the government of Latvia and FICIL was held on June 2, 2005. The next High Council meeting between the government of Latvia and FICIL is scheduled for spring, 2006.
To view the official communiqué of the High Council Meeting, please click below:
Self -Assessment
During 2002, the improvements in terms of “administrative barriers” were evaluated. With the assistance of World Bank consultants, the LIAA carried out a "self-assessment study" of the impact of different administrative procedures on the business environment, taking into consideration the progress achieved since 1999. The self-assessment report was presented to public on January 23, 2003. The aim of the self-assessment project was the application of particular instruments (such as the Regulatory and Administrative Cost Survey, standardized procedure templates, legal analysis), allowing the government to identify existing administrative barriers and other problems hindering business. Summarizing the official data and informal opinions of entrepreneurs, the results of the survey reflected a fair and balanced evaluation of the business environment of Latvia, helping to define the priorities for further reforms.
Please find the full report of the self – assessment exercise in Latvia by clicking on the link below:
Self – Assessment Report on Administrative Procedures for Doing Business in Latvia
Chapter I, Methodology and Objectives of the Self-Assessment Exercise in Latvia
Chapter II, Background and Overall Observations
Chapter III, Start -Up Procedures
The LIAA in collaboration with the WB/FIAS and market research company Latvia Facts were undertaking a repeated business survey which represents the next round of evaluation of the reform effectiveness.
Achievement
These activities have received support from the EU PHARE program, World Bank/FIAS, International Development Agency of Sweden and other international financiers. World Bank/FIAS to a significant extent has based the development of its self-evaluation tools on the experience of pilot projects in Latvia. The EC DG Enterprise awarded these activities "CC BEST" status signifying that the policy of Latvia in this area is exemplary for other candidate countries of the EU for the improvement of their competitiveness. The EU Progress Report has also consistently praised the "serious efforts of Latvia to improve the business climate".
Experience of Latvia
