SHADOW ECONOMY AND ITS ANALYSIS OF COMBAT IN LATVIA

Abstract

The problem of the study relates to the fact that tax payments in the national budget constitute revenue used to provide public functions. However, given the fact that tax payments reduce income for citizens and businesses, it motivates tax avoidance to be avoided, thereby generating immediate benefits of higher incomes. Such a situation creates a shadow economy in a country that threatens the country's future ability to ensure that its functions are fulfilled. To improve people fair pay taxes Latvian government created The council for prevention of the ‘shadow economy’ in 2014. It aims are creation and realisation of prevention activities across all sectors, analyses of the results as well as taking measures to fight the shadow economy and evaluates the effectiveness of the taken actions.