Lithuania Plans New Cash Register Rule for Self-Employed to Combat Shadow Economy

Lithuania's State Tax Inspectorate (VMI) is preparing a new requirement that will compel individuals working independently in certain professions to use cash registers. This move is intended to boost state budget revenue and curb the shadow economy, which is estimated to cost the country millions.

The proposed regulation targets self-employed individuals operating from fixed locations, including those in beauty services, auto repair, construction, and consulting. Martynas Endrijaitis, deputy head of the VMI, explained that this primarily affects hairdressers, beauticians, mechanics, builders, and consultants. Currently, only about 220 out of 30,000 self-employed individuals in the beauty sector use cash registers, despite many reporting incomes that do not align with their perceived lifestyles.

Industry representatives express skepticism about the effectiveness of mandatory cash registers. Jolanta Mačiulienė, president of the Hairdressers and Beauty Specialists Association, questioned whether forcing a hairdresser to have a register would prevent them from not ringing up sales. She suggested that many in the beauty sector already operate honestly through contracts or business licenses.

In the construction sector, Dalius Gedvilas, president of the Lithuanian Builders' Association, estimates that around 24,000 individuals work illegally. He pointed to the prevalence of partially finished apartments being sold, with the work often done by individuals not paying taxes. Out of approximately 280,000 people engaged in individual activities, only about 7,000 currently use cash registers. The VMI believes that administrative measures like mandatory cash registers are necessary to ensure compliance, while critics argue that individuals determined to avoid taxes will find ways to do so, regardless of the equipment.