Business, Estonia, Financial Services, Taxation

According to Finance Minister Sven Sester the reached agreements would improve Estonia's tax environment, spokespeople for the government said. "The Ministry of Finance can now start drafting changes to laws which will help make the tax environment fairer and support Estonian people's spirit of enterprise," Sester said.

The minister first presented to the government a plan for lowering the income tax rate on dividends to 14% for so-called mature companies. The current rate of 20% favors retaining profits.

Secondly, he put forward a plan how to limit the possibilities of Estonian subsidiaries of foreign businesses to move their undistributed profits out of this country untaxed by giving loans to parent companies. The finance minister's proposal was to introduce a deposit tax which businesses are obliged to pay on intercompany loans.

The Ministry of Finance was tasked with preparing the necessary amendments to the Income Tax Act which are planned to enter into effect on Jan. 1, 2018.

Sester further presented proposals to simplify the taxation and accounting rules of self-employed persons. The aim of the proposals is to create for self-employed persons a tax and business environment similar to that of companies. According to the minister implementation of those proposals would create more equality for self-employed persons compared to other forms of business. The suggestions concern changes in the Income Tax Act as well as the Social Tax Act and would be helpful to small businessmen in running their business.