Topics Topics

Finance Ministry ponders new charge on non-resident transactions

The Finance Ministry and the Financial and Latvia's financial regulator, the Capital Markets Commission (FKTK), are pondering the introduction of a new charge on banks carrying out high risk deals involving non-resident transactions, reported Latvian Radio Friday.

FKTK has been tasked by the Finance Ministry to look into whether it'd be possible to tax high risk financial transactions. The regulator is expected to produce results not earlier than September. 

Two birds with one stone

Finance Minister Dana Reizniece-Ozola thinks that the introduction of a new charge would kill two birds with one stone. It would add funds to state coffers and reduce the willingness of boutique banks specializing in non-resident transactions to carry out shady deals.

"The idea is to classify clients into eight groups and to apply the charge, if it would be applied at all, to the groups with the highest risk," said the Finance Minister, adding that caution should be exercised so that business doesn't cede completely if the charge is introduced.

"We all understand that security is a priority, a very important one at that. Banks, too, should understand the rules of the game, according to which they should operate," the minister said.

Banking sector: promises would be broken

While Mārtiņš Bičevskis, head of the Association of Latvian Commercial Banks (LKA), said that by introducing the new charge the government is effectively backing out of promises given previously.

"The Prime Minister and Finance Minister promised to the Latvian economy that there wouldn't be any significant changes in the tax system in 2017. Any introduction of a tax or a charge is in reality a significant change that introduces a completely different policy," said Bičevskis.

"A step like this is, let's say, an action that goes completely against the promises given just recently," he said.

According to Bičevskis, imposing a charge on non-resident transactions would damage both Latvia's reputation and competitiveness.

He said that there are no similar charges being imposed in the region and that it's unclear as to whom the charge would apply to. Bičevskis also said that it would compel foreign clients to reorganize and reevaluate their activities.

Boutique banks under fire

Starting late last year, FKTK has turned against several boutique banks specializing in servicing non-resident clients. Several banks have been doled out huge fines while Trasta was stripped of its licence and is due to be liquidated after being named in connection with numerous money laundering scandals.

As reported, this week Latvia-registered PrivatBank had its branch in Italy shut down by the Italian authorities over suspicions it was engaged in large-scale money-laundering.

Seen a mistake?

Select text and press Ctrl+Enter to send a suggested correction to the editor

Select text and press Report a mistake to send a suggested correction to the editor

Related articles
Economy
Economy

Please be aware that the LSM portal uses cookies. By continuing to use this site, you agree that we may store and use cookies on your device. Find out more

Accept and continue