To reduce the shadow economy in the construction sector by more effectively controlling employee work time and records, including on smaller construction sites, the Saeima, during its December 5 session, approved amendments to the Law on Taxes and Duties in its final reading. These amendments aim to make it more difficult to conceal the number of unregistered workers or their working hours, thereby reducing under-the-table wage payments.

The amendments were developed in line with the Shadow Economy Reduction Plan for 2024–2027 and foresee broader application of the Electronic Work Time Tracking System (EDLUS). The system will now be mandatory on all construction sites where the value of construction work is at least €170,000 (currently, EDLUS is required for construction work valued at €350,000 or more). The new regulations will apply to construction projects where the commencement of work conditions are certified, or the explanatory memorandum is approved after January 1, 2025.

When preparing the Shadow Economy Reduction Plan, it was concluded that “smaller projects” – i.e., residential construction, minor renovations, or refurbishments in public and industrial buildings – lack effective measures to curb the shadow economy. Therefore, specific measures were included to reduce the shadow economy in smaller construction projects. Lowering the EDLUS threshold is not expected to impose an excessive burden, as maintaining EDLUS at construction sites costs approximately €100 to €200 per month per site.

Simultaneously, the amendments reduce the permissible discrepancy between the work hours registered in the State Revenue Service's (SRS) Electronic Declaration System (EDS) and those recorded in EDLUS to 15%. This regulation will come into effect on January 1, 2026.

EDLUS was introduced on construction sites in 2019. Its implementation has already proven effective on larger projects, where the number of violations identified by the SRS has decreased, and the declared income amounts have increased. This fosters legal employment, enhances state tax revenues, and ensures better social guarantees for employees. The proportion of the shadow economy has decreased by 10% since 2017.

Public Relations Division of the Ministry of Economics
prese@em.gov.lv