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The Minister of Finance, Vilius Šapoka, has said that the abolition of commercial licenses for construction, car repair and childcare will reduce the shadow and allow competition from more competitive entrepreneurs. According to him, these areas were chosen because they have the highest parallel activity: profits are high, but low taxes are paid.
As of July 1, these business certificates no longer exist, and residents who have them must choose another form of activity, such as registering an individual activity based on a certificate, and keeping records of income and expenses, and issuing one of the following accounting documents: invoice, VAT invoice or cash register receipt.
According to data from the State Tax Inspectorate (ITS), this year a total of approximately 27.5 thousand people had acquired commercial certificates, whose issuance procedure changed in the second half of the year. population.
The playing field will be leveled, but the legal business will see no change
According to Robertas Tamulevičius, representative of the Lithuanian auto services platform Motointegrator.com, the new procedure will contribute to equalizing the competitive conditions for all car services, and those car services that operate honestly will not notice any changes.
He also points out that this order should not lead to radical changes, i. and. that people who have worked with business licenses actually cease or change their activities. Most, he said, will simply record individual activities or businesses.
“Currently, auto mechanics who have worked under a business license are more scared not only by taxes, but also by the uncertainty of what and how it is going to change. Therefore, in order for everything to go well, they must be introduced the new procedure in detail, showing that it is not complicated.
It is worth emphasizing that registration for the individual activity certificate is carried out remotely, and in the first year it is exempt from the Sodra tax during individual activity, ”says R. Tamulevičius.
The interviewee points out that changes due to shade began to take place a few years ago. According to him, all invoices are already submitted to STI.
Car repair
As taxes increase, service prices will rise slightly
“The new changes will lead to a change in the form of activity, but will not necessarily contribute to reducing the shadow, as other forms of activity can be used to find ways to reduce taxes,” said a Motointegrator.com spokesperson.
However, the interviewee notes that the prices for the services of the so-called “garages” – illegally working car repairers – did not differ several times, and were often close to other officially operating auto repair shops.
“The so-called ‘garages’ could have offered a lower price for both unpaid taxes and lower investment in professional equipment or lower business costs,” explains R. Tamulevičius.
A spokesperson for the platform, which unites auto repair shops, is considering that the tax increase will also lead to a slight increase in service prices, but this should not scare drivers.
He notes that customers should be aware that by picking up a document for repairs, such as a check, they can declare the cost of repairing the car and get some money back. Also, having a check gives customers the same guarantee.
“If you pay a little higher price, but get a check and a warranty, you can save time and money. If something goes wrong after the vehicle is repaired, car owners can easily demonstrate that they have repaired their car at this auto repair shop. auto repair and may require a repair. In addition, drivers can declare the cost of automobile repairs and recover part of them, “explains the interlocutor.
The legal business has to cut prices because it cannot survive.
However, the head of the Lithuanian Association of Automobile Services Ainis Petkus points out that prices for services should decrease.
“Now our legal business needs to reduce prices to stay and compete. And the problem right now is that the inflation rate is high,” it “works capital. Today, companies have to reduce prices, try to compete in a uneven and distorted market, and deflationary processes begin, which always lead to shadows ”, he points out.
According to A. Petkus, the pandemic highlighted the problem: the decrease in money. As a result, legal garages cannot survive at this time.
“The government did not help us at all, nothing was poured into the business. (…) On this basis, the money has not been put on the market, it is shrinking and competition is needed. Therefore, companies they will reduce prices because they cannot survive, ”says the head of the Lithuanian Association of Automobile Services.
Car repair
The respondent could not name exactly how much service prices could decrease, but noted that free fees for shady services, noncompliance with environmental and other regulations lead to a price difference between official and illegal workers.
“Due to non-payment of taxes, the difference between non-compliance with all regulations may be around 15%. If the price drop reaches that level, services will declare bankruptcy or remain in the shadows.” , fear.
The interviewee pointed out that the automobile business is seasonal and that summer is one of the worst periods.
“It did not help our business because it was a very warm winter, there were no salts and other elements, which has great consequences for cars.” The cars had a great winter, there was absolutely no wave of repairs in the spring.
In the spring another coronavirus arrived, which stopped everything. Summer finally came, when the usual decline in work. Our business did not have the ability to accumulate resources to endure difficult times. The entire car segment is gradually going down, ”says A. Petkus.
There are no control instruments, the shadow will remain
The interviewee is convinced that the changes will start on July 1. It will not completely clarify the market and the same problems will persist. He previously said that at least two-thirds of the auto business operates in the shadows, and that there are more than $ 500 million in the service segment. euros in the shadows. It is reported that these figures will be provided to the public authorities together with all the methodological material.
“Everything as it was, will remain: there is no way to remove a part of the shadow, because it is impossible to identify people who are engaged in individual activities or commercial licenses. The STI or other state control entities cannot identify, track or control them, ”says A. Petkus.
Car repair
Replacing business certificates with an individual activity certificate does not solve the problems: “If a person wants to repair cars, he takes out the individual activity, pays taxes and goes to repair them. And where will he repair, what are his qualifications and competence: nobody controls him. As required by law, there is no control instrument. “
Explaining the proposed regulation, the head of the auto service association mentions: “If you want to do auto repairs, you must first provide the exact location where the activity will take place. There must be a lease and the premises must comply with the regulations described by the Ministry. A contract for the disposal of hazardous waste and trash and a cash register or bank terminal are also required. “
The three measures, according to the interlocutor, would make it possible to identify a person who provides car service services based on individual activity. However, all of this has yet to be implemented.
“The STI and the government are deciding whether to try to introduce regulations through a tax format for individual activities, which they do not want because they will be accused of destroying small companies, or by licensing. We are trying to find compromises not to impose administrative fees and business charges, and how to bring the shadow to the surface, ”says A. Petkus.
According to him, if the government does not take action, there will be no regulations for individual activities or licensing procedures, for example, there will be nothing for employees to determine the qualification, skill level and competence of auto repairmen.
“We will keep the shadow only growing,” says A. Petkus.
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