On Thursday, 2 October, the Saeima adopted in the final reading amendments to the Public Procurement Law, which requires that businesses submitting public tenders must first settle their tax debts. As of 1 August 2015, all contracting authorities will be required to conduct an in-depth price evaluation in cases when the quotation is suspiciously low. Analysis also will have to be conducted if the average salary in the company falls under 80% of the national average for the relevant profession.  

“This will encourage regular payment of taxes, for it will no longer be possible to pay taxes only after the government or municipal authority has awarded the contract. This will also be a way to support businesses that are diligent taxpayers. It is absurd to spend taxpayers’ money on granting public procurement contracts to companies or their subcontractors that do not pay taxes for income received in the framework of the public procurement contract”, explained Jānis Ozoliņš, Chairman of the Economic, Agricultural, Environmental and Regional Policy Committee, which is responsible for processing the amendments.

Until now the Law required public authorities to check only the tax history of the company which won the contract. The company to which the procurement committee decided to award the contract, was permitted to settle its tax debts within 10 business days. 

The new provisions, however, will require state and municipal authorities to check the tax payment records of all tenderers at the beginning of the procurement process and to exclude tax evaders from further participation in the procurement process. On the day of the call for proposals and upon signing of the contract, the winning tenderer’s tax debt must not exceed EUR 150. 

When analysing unreasonably low bids, contracting authorities will now be entitled to request the tax authority to provide an opinion on whether the average hourly salary indicated by the contractor and/or subcontractor is reasonable for their business activity. The State Revenue Service will be required to issue its opinion within 15 business days.

The amendments also introduce several exceptions to the procurement procedure stating that as of November 2014 all food supply procurements will have to be based on the so-called green procurement rules.

Furthermore, henceforth the provisions of the Law will not apply to higher education institutions if the contract is below EUR 99,000 and if it is concluded for services aimed at attracting students from non-EU member states.

Saeima Press Service