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08/11/2019   Conference on combatting the shadow: are measures in place to reach the target?

Fight against the shadow economy is one of the priority areas for the Government action, whereas the size of the shadow economy in Lithuania is high: according to a 2019 research study carried out by “Spinter Research”, it amounted to 23.9 %. GDP in 2018. The National Audit Office together with the Parliamentary Committee on Audit on Friday 8 November co-organised a conference on “Combating the shadow — are measures in place to reach the target?”. The conference shared insights into the state-chosen strategy for fighting the shadow, the costs and benefits of measures to combat it, and further plans in this area.

Ms Ingrida Šimonytė, Chair of the Committee on Audit of the Seimas, said at the opening of the conference that, while the theme of the fight against the shadow is a topical and multi-layered issue, and there are no simple solutions to the problem, however, a strange tendency prevailing in public life allows for serious manipulation of this problem.

“Sometimes this may include political communication presenting the fight against the shadow as a miracle cure for all complex issues, sometimes simply creating perverse forms of fighting, which is more similar to the shooting of sparrows with a canon rather than adequate way of solving the problem. In other words, more often no consideration is given to the fact that it is we ourselves, the regulators, who create incentives facilitating the flourishing of the shadow — through tax arbitrage, inadequate regulations, other means,” said Ms Šimonytė, and added that this was an opportunity to invite policy makers to discuss how this problem could be dealt with in a different way.

“Shadow economy or tax evasion is one of the most sensitive dark sides of the state, the size of which in Lithuania is one of the highest in Europe: according to the data of the European Commission, we do not collect over EUR 1 billion of VAT each year. Lithuania’s shadow economy is above the European average by one third. The time when we discuss the future budget will of course increase the temperature of the debate. In the fight against the shadow, there is always a risk of using limited State resources for inefficient measures”, said the Auditor General Arūnas Dulkys at the opening of the conference.

Proper implementation of measures to reduce the shadow economy could have a significant impact on the state. It was noted at the conference that there is a wide range of measures to reduce the shadow, some of them require a big investment, but often a rather little effect is created, or their impact is not measurable and it is not known if the intended outcome is achieved.

Deputy Auditor General Živilė Simonaitytė delivered presentation “Measures to combat the shadow — does prevention and control meet the expectations” and made an overview of the relevant public audits carried out by the National Audit Office – “Smart tax administration system“ and “How the State Tax Inspectorate ensures safe and legal participation in the labour market“. Presentations at the event were also delivered by Vaidas Augustinavičius, Advisor to the President, Kęstutis Lisauskas, partner of Ernst & Young Baltic, and Daiva Čibirienė, President of the Lithuanian Association of Auditors and Accountants

Following the session, the speakers at the Conference took part in the debate on “Measures to reduce the shadow economy — or are there conditions in place to reduce the shadow?”.

 

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Last updated on 15 November 2019

National Audit Office of Lithuania

Pamėnkalnio St 27, LT-01113 Vilnius, Phone: + 370 5 266 6793, + 370 5 266 6752, Email: nao@vkontrole.lt.