Starting November 1, amendments to construction regulations come into effect, directly affecting everyone planning to start construction or major renovations of a house, writes Latvijas Avīze.
A new requirement mandates the indication of the source of funding for planned construction works in the Building Information System (BIS). It is expected that this requirement will create problems for those who cannot confirm the legality of the origin of their funds, while cash transactions will fall into the risk zone.
The authors of the new regulations hope to generate an additional 2 million in the budget through the declaration of construction financing. In practice, this means that out of the four sources of income offered in the system - "income from paid work," "income from economic activities," "loans," and "other sources of income" - one or more options that correspond to the situation must be selected. When choosing "other sources of income," more specific information must be provided, such as "gift," "inheritance," etc.
All provided information will be sent to the State Revenue Service (SRS), which will compare the declared source of funding with its information about the individual's income. If discrepancies are found or doubts arise about the origin of the funds, the tax authority may initiate a thorough audit.
"If you have lived on the minimum wage for several years, of course, the SRS may have questions about how you found the means to build a house," comments the new rules by jurist Lauris Klāgishs.
The SRS stated that the information available in the BIS about the source of funding will be analyzed using a computerized risk analysis system. For example, if a person indicated savings as the source of funding, it will be assessed whether they could have had such funds at their disposal, taking into account income from paid work, registered economic activities, dividends, property sales, inheritance, gifts, etc. from the previous period.
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