The discussion focuses on how Latvia can improve its approach to tackling the shadow economy, which remains a significant issue. Key stakeholders, including the State Audit Office, policymakers, and representatives from business organizations and academia, are participating to evaluate necessary changes in state policy to enhance effectiveness in this area. Notably, the focus is on understanding what actions should or should not be taken to curb the shadow economy, particularly in sectors where it is prevalent.

Earlier this year, the State Audit Office published the results of an efficiency audit regarding the government's approach to controlling the shadow economy. The findings highlighted that despite sustained attention from the government, the current approach lacks effectiveness, as the measures implemented are primarily reactive, focusing on consequences rather than addressing root causes. This indicates a need for a strategic overhaul to improve outcomes in reducing the shadow economy.

The audit also pointed to taxation as a significant driver of the shadow economy, with research indicating that taxes influence the prevalence of undeclared economic activities. Although work on tax policy guidelines has been ongoing, the government has yet to approve a clear vision for the future development of tax policies. The discussion aims to chart a path forward for a more strategic and proactive government stance on reducing the shadow economy in Latvia.