Tax authority impact on company’s liquidation (Latvian example)

Abstract

The role of the state in regulating the business environment is high and there are situations where the state must promote the suspension of the company's business and liquidation of the company, if it results in the improvement of the business environment. The research aim is to analyze the State Revenue Service (SRS) impact on taxpayer’s business directly or partly directly by using enactments and as a result the impact on the company’s liquidation. The author compiled statistics from the SRS public reports about the SRS activities to put the business environment in order and promote fair competition in business using tools for taxpayer operation-restricting measures. And also schematically presented the provisions of the regulatory enactments regarding the suspension and renewal of the taxpayer’s economic activity, as well as exclusion from the Register of Enterprises in case if the violation does not relate to the employment of employees without a contract. Used methods: the monographic method, statistical methods, logical analysis and synthesis, the graphics method, the logical and constructive methods were used in analyzing results and making judgments. The present research used the author’s previously made research, the Latvian enactments The Commercial Law and The Law on Taxes and Duties, the annual reports of the State Revenue Service of the Republic of Latvia and their statistics. Starting from 2013 in the average for 11073 taxpayers per year the SRS suspend their economic activity. Started from 2014 the SRS terminated the taxpayer activity in 29321 cases and from this amount the 27076 taxpayers were registered in the Register of Enterprises and mostly are limited liability companies. According to the statistical data author concludes that SRS is very active to put the business environment in order and it affects on the number of excluded entities from Registers of Enterprises too. During 2012 – 2017 were registered 83121 entities and excluded 53645 entities in the Register of Enterprises, and in the same time of period (2012 – 2017), SRS suspended 50335 taxpayer’s economic activities but renewing the economic activities only 4.93% of them. JEL Codes: G38, H26, M48. DOI: https://doi.org/10.15544/ssaf.2019.02