Estonia, Financial Services, Legislation, Markets and Companies, Taxation

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Estonia plans to introduce business bans for tax debtors

Juhan Tere, BC, Tallinn, 30.10.2012.Print version
Nearly a half of tax debts in Estonia have been caused by just a thousand businessmen and the justice ministry is mulling a plan to enforce a full business ban against them, LETA/Eesti Päevaleht writes.

Tax fraudsters cost the state a lot: as of the start of October, tax evaders owned the state 358.5 million euros, which would have sufficed for wage increases for both teachers and doctors without them having to hold strikes.


"We started looking at the beginning of this year that there are people behind the debts. Even we were surprised that we saw systematic activities regarding around a thousand people. They had participated in the management of companies and had left at least 5,000 euros of tax debt behind them. This isn’t a small land tax debt, this is debt caused by wilful activities," Tax and Customs Board director general Marek Helm said.


Thus around a thousand businessmen involved in around 2,800 companies owe the state nearly 144 million euros.


The Tax Board states that the current system doesn't enable to stop the tax fraudsters and tougher solutions are needed. "Thus we made the proposal for business restrictions that would concern both the owners and members of management bodies of indebted companies, who have the legal right to conduct transactions that can result in a tax debt," Helm said.


According to the Tax Board plan, a business ban could be enforced against a person who is involved in at least three companies and has caused each of them at least 5,000 euros of tax debts.


While entrepreneurship and business bans can be enforced currently too on certain conditions, these mainly concern members of management bodies or certain types of economic crime and don’t cope for example with situations where owners place on board members positions people who have nothing to do with the business activities of the company nor any assets to speak of and when debts pile up, a new company is founded and creditors at bankruptcy cases are left with nothing.


The justice ministry is thus debating ways of enforcing a full business ban on people involved in business, without harming honest businessmen. The plan is to submit the bill to the minister in November.

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