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ESTONIAN TAXES AND TAX
STRUCTURE
Tax Policy Department
As of January 1, 2016
Outline of presentation
• The main principles of the Estonian tax
system, the current tax structure
• Taxation Act
• Direc...
Estonian Tax System
The main principles of Estonian tax policy:
• simple tax system
• broad tax base, low rates
Flat incom...
Estonian Tax System
To achieve sustainable, socially and regionally
balanced economic growth Estonian tax system
consists ...
1) excise duties;
2) income taxes;
3) gambling tax;
4) value added tax;
5) land tax;
6) social tax;
7) customs duty;
8) he...
Taxation Act
Taxation act specifies
• Estonian tax system
• main definitions used in all tax acts
• requirements for tax a...
Taxation Act
“Tax” is
• a single or periodical financial obligation
• imposed by an Act or by a local government council
r...
Taxation Act
Requirements for Act concerning tax
1) name of the tax;
2) object of taxation;
3) tax rate;
4) taxpayer;
5) r...
• The tax authority for state taxes is the Tax and
Customs Board with its regional offices. The tax
authority operates wit...
• Corporate income tax – 20% on distributed profit
• Personal income tax – 20%
• Social tax – 33% (payable only by employe...
0
5
10
15
20
25
30
35
40
2000 2002 2004 2006 2008 2010 2012 2014* 2016* 2018*
Direct taxes Indirecttaxes Social security c...
Tax burden ( % of GDP)
Source: Statistical Office of Estonia, Ministry of Finance
31,0
30,2
31,0
30,8
30,6
30,6
30,7
31,4
...
Structure of tax revenue
0%
20%
40%
60%
80%
100%
Personalincometax Corporateincometax
Social contributions VAT
Exice dutie...
Tax Revenue 2015
Total tax revenue 7 127.8 million EUR
Transmittable taxes* 1 187.3 million EUR
Personalincome
tax*
16,6%
...
Tax Revenue 2015, million € (collected)
* - The amount received by the state + local governments
**- transmittable taxes
m...
• Income tax (personal and corporate income
tax both stipulated in the Income Tax Act)
• Social tax
• Land tax
Direct taxes
Reasons for introducing flat rate in
Estonia
• High inflation rate - in case of flat rate there is
no need of frequent adj...
The outcome…
Personal income tax revenue
1994-2019 million €
0
200
400
600
800
1 000
1 200
1 400
1 600
1994 1996 1998 2000 2002 2004 20...
Corporate income tax revenue
1995-2019
0
50
100
150
200
250
300
350
400
450
1995 1997 1999 2001 2003 2005 2007 2009 2011 2...
• Residents pay tax on their total worldwide
income.
• Non-residents pay tax only on their income
received from Estonian s...
Personal income tax
Period of taxation: a calendar year
Tax rate: 20% (separate tax rate 10% for certain pensions
and paym...
Personal income tax
Non-taxable minimum (annual basic exemption):2 040 EUR
Additional exemption for state pensions: 2 700 ...
26
24
23
22
21
2019
32
51
64
89
109
128
144
154
170
180
190
0
20
40
60
80
100
120
140
160
180
200
18
20
22
24
26
28
%
Inco...
Personal income tax
For non-residents there is a limited list of taxable income in the
Income Tax Act:
• income from work ...
Personal income tax
For non-resident individuals
• Period of taxation is a calendar year
• Tax rates: 20% and 10%
Personal income tax
Tax allocation of personal income tax paid by
residents
• The amount received by local governments is ...
Personal income tax
Avoidance of double taxation
Individuals
Exemption method for foreign dividends and
certain salary inc...
Corporate income tax
• Corporate tax reform in year 2000
• The ultimate goal of the reform was
promotion of business and a...
Corporate income tax
Elimination
of technical
shortcomings
Additional
funds available
for investment
Stricter
regulation
o...
Corporate income tax
The moment of taxation of corporate income is
postponed until the distribution of the profits
The sys...
Tax rate 26 %
(on gross
profit)
Income tax
26 EUR
Dividend
payment
74 EUR
Profit
earned
100 EUR
Time
The taxation of profi...
Income tax
26 EUR
Dividend
payment
74 EUR
Profit
earned
100 EUR
Tax rate 26/74
(on net amount,
equals to 26% of
gross prof...
Corporate income tax
Tax base
• corporate profits distributed in the tax period; dividends
and other profit distributions,...
Corporate income tax
Tax rate
• Tax rate in 2016: 20% (20/80 of the net amount
of the dividend or other profit distributio...
Corporate income tax
+ qualified
dividend
received
100 EUR
+ foreign
interest
received
100 EUR
(source state
WHT 10)
Donat...
Corporate income tax
There are 3 main methods introduced in the Estonian Income
Tax Act, the goal of which is to minimize ...
Corporate income tax
Avoidance of double taxation
Companies and non-resident’s PEs
Exemption method for qualified (thresho...
Double tax treaties (DTT)
• Estonia has 56 treaties for the avoidance of
double taxation (income and capital taxes) in
for...
Structure of declared corporate
income tax 2003-2019
0
100
200
300
400
500
2003 2005 2007 2009 2011 2013 2015 2017* 2019*
...
Social tax
Tax Base
• Employers' payments to individuals (wage
income) – tax payable by employers
• in cash
• in kind (fri...
Social tax
Tax rate
• Tax rate is 33 % of the taxable amount
Period of taxation
• Calendar month for wage income
• Calenda...
• Tax allocation IF the person has joined the II pension pillar
(compulsory for the persons who have born in 1983 or later...
Social tax revenue and structure
million €
0
500
1 000
1 500
2 000
2 500
3 000
1994 1996 1998 2000 2002 2004 2006 2008 201...
Land tax
Tax base
• Land tax is paid on all land (with some exemptions)
based on the taxable value of land.
Taxable person...
Indirect taxes
• Value added tax
• Alcohol excise duty
• Tobacco excise duty
• Energy products excise duty
• Packaging exc...
Taxable person
• Person whose taxable supply (excluding
import) exceeds 16 000 EUR in a calendar
year
• Voluntary complian...
Tax base
VAT is charged on:
• transactions of goods and services within
Estonia
• intra-Community acquisitions of goods an...
Tax rates
Standard rate is 20%.
Reduced rate is 9% (books, newspapers,
medicines, accommodation).
Zero rated: export; intr...
Exempted goods and services are:
• postal services
• health services
• social services
• insurance services
• services for...
VAT revenue 1994-2019
million €
0
500
1 000
1 500
2 000
2 500
3 000
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014...
Excise duties
Excise duties are levied on:
• Alcohol
• Tobacco
• Fuel
• Electricity
• Packaging
Duty rates on alcohol, tob...
Excise duty rates on alcohol
Unit
Excise duty
rates
01.02.2016
EU minimum
excise duty
rates
Wine and
fermented
beverage
He...
Excise duty rates on tobacco
products
Product Excise duty rates
01.01.2016
EU minimum
excise duty rates
CIGARETTES:
58,00 ...
Excise duty on energy products
The excise duty rate of:
- unleaded and leaded petrol will rise by 10% in 2016-2018;
- dies...
Excise duty rates on motor fuels
Energy product Excise rates in
Estonia 01.01.2016
EU minimum excise
duty rate
Unleaded pe...
Excise duty rates on heating fuels
and electricity
Energy product Excise rates in
Estonia 01.01.2016
EU minimum excise dut...
Excise duty revenue 1994-2019
million €
0
200
400
600
800
1 000
1 200
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 20...
Packaging excise duty
Object of taxation:
Excise duty on packaging is imposed on packaging launched to
the market of Eston...
Packaging excise duty
Excise is not charged:
• on alcohol or nonalcoholic beverages packaging
with deposit imposed on the ...
Heavy Goods Vehicle Tax
Mandatory tax imposed by EU law.
Object of Heavy Goods Vehicle Tax
Trucks or road trains intended ...
Gambling Tax
Gambling tax is paid by gambling operators.
Period of taxation
• calendar month or
• the period during which ...
Gambling tax
Object of gambling tax Tax rate
Gambling tables for games of chance, (except
tables used for tournaments) and...
Gambling tax
Object of gambling tax Tax rate
Online game of chance or online game of
skill, the total amount of bets, less...
Customs duty
Tax base
• Common customs tariff duties are generally applicable to all
goods imported into the EU
Tax rate
•...
Background information
GDP Growth 2005–2014
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
SK
PL
LT
BG
RO
EE
MT
LV
LU
CZ
IE
SE
UK
DE
SI
AT
BE
NL
EU28...
Estonian real convergence with the EU
(% of EU28 average)
0
10
20
30
40
50
60
70
80
90
2000 2002 2004 2006 2008 2010 2012 ...
Growth expectations
GDP growth,
%
Consumer price
index, %
2015 2016 2015 2016
IMF 1.6 2.5 0.2* 1.6*
OECD 1.8 2.5 0.1* 1.3*...
General Government budgetary balance
2003-2019
1.8
2.4
1.1
2.9 2.7
-2.7
-2.2
0.2
1.2
-0.3
-0.1
0.8
0.0
-0.1
0.1
0.8
1.4
-4...
General Government tax burden
1995-2018
36,3
34,3 34,3 34,0
32,5
31,0 30,2 31,0 30,8 30,6 30,6 30,7 31,4 31,9
35,9
34,0
32...
General Government debt in 2014
10,4
0
20
40
60
80
100
120
140
160
180
Estonia
Luxembourg
Bulgaria
Romania
Latvia
Lithuani...
Tax rate on low wage earners: Tax wedge on
labour cost (single, 67% average wage)
32
34
36
38
40
42
44
46
1996 1998 2000 2...
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Estonian Taxes and Tax Structure (as of 1 january 2016)

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The main principles of the Estonian tax system, the current tax structure, Taxation Act, Direct Taxes, Indirect taxes

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Estonian Taxes and Tax Structure (as of 1 january 2016)

  1. 1. ESTONIAN TAXES AND TAX STRUCTURE Tax Policy Department As of January 1, 2016
  2. 2. Outline of presentation • The main principles of the Estonian tax system, the current tax structure • Taxation Act • Direct Taxes (Personal Income Tax, Corporate Income Tax, Social Tax, Land Tax) • Indirect taxes (VAT, Excise duties, Gambling Tax, Heavy Goods Vehicle Tax, Customs Duty)
  3. 3. Estonian Tax System The main principles of Estonian tax policy: • simple tax system • broad tax base, low rates Flat income tax rate since 1994 (followed by Lithuania, Latvia, Russia, Ukraine, Serbia, Slovakia, Georgia, Romania, ...) Corporate income tax reform in 2000.
  4. 4. Estonian Tax System To achieve sustainable, socially and regionally balanced economic growth Estonian tax system consists of state taxes provided and imposed by tax acts and local taxes imposed by a rural municipality or city council in its administrative territory pursuant to law
  5. 5. 1) excise duties; 2) income taxes; 3) gambling tax; 4) value added tax; 5) land tax; 6) social tax; 7) customs duty; 8) heavy goods vehicle tax. State taxes Local taxes 1) advertisement tax; 2) road and street closure tax; 3) motor vehicle tax; 4) animal tax; 5) entertainment tax; 6) parking charge.
  6. 6. Taxation Act Taxation act specifies • Estonian tax system • main definitions used in all tax acts • requirements for tax acts • rights, duties and liability of taxpayers, withholding agents, guarantors and tax authorities • regulations of the tax procedure and procedure for resolution of tax disputes • penalty interest rate 0,06% per day
  7. 7. Taxation Act “Tax” is • a single or periodical financial obligation • imposed by an Act or by a local government council regulation according to Local Taxes Act • for the performance of the public law functions or to obtain revenue to perform these functions • subject to performance pursuant to the procedure, in the amount and on the due dates prescribed by an Act • collected without direct compensation therefore.
  8. 8. Taxation Act Requirements for Act concerning tax 1) name of the tax; 2) object of taxation; 3) tax rate; 4) taxpayer; 5) recipient of or place of receipt of the tax; 6) due date or term for payment of the tax; 7) procedure for payment of the tax; 8) procedure for implementation of the Act concerning a tax; 9) possible tax incentives.
  9. 9. • The tax authority for state taxes is the Tax and Customs Board with its regional offices. The tax authority operates within the area of government of the Ministry of Finance. • Tax authority verifies the correctness of tax payments, assesses amounts of tax and interest due in the cases provided by law, collects tax arrears and implements sanctions against persons who violate tax Acts. Tax Authority
  10. 10. • Corporate income tax – 20% on distributed profit • Personal income tax – 20% • Social tax – 33% (payable only by employer) • Unemployment insurance payment – 1,6% payable by employee and 0,8% payable by employer • Contribution to the mandatory funded pension system - 2% (payable by employee) • Value added tax - 20% (standard rate), 9% (reduced rate) Main tax rates
  11. 11. 0 5 10 15 20 25 30 35 40 2000 2002 2004 2006 2008 2010 2012 2014* 2016* 2018* Direct taxes Indirecttaxes Social security contributions Structure of tax burden (% of GDP) Source: Statistical Office of Estonia, Ministry of Finance
  12. 12. Tax burden ( % of GDP) Source: Statistical Office of Estonia, Ministry of Finance 31,0 30,2 31,0 30,8 30,6 30,6 30,7 31,4 31,9 35,3 34,0 32,3 32,5 32,3 32,4 31,9 31,6 31,6 31,7 29 30 31 32 33 34 35 36 37 2000 2002 2004 2006 2008 2010 2012 2014* 2016* 2018*
  13. 13. Structure of tax revenue 0% 20% 40% 60% 80% 100% Personalincometax Corporateincometax Social contributions VAT Exice duties Land tax Other taxes Source: Statistical Office of Estonia, Ministry of Finance
  14. 14. Tax Revenue 2015 Total tax revenue 7 127.8 million EUR Transmittable taxes* 1 187.3 million EUR Personalincome tax* 16,6% Corporate income tax 6,0% VAT 26,1% Excise duties 12,2% Heavygoods vehicle tax 0,1% Customs duty 0,5% Socialtax 33,6% Gambling tax 0,3% Land tax* 0,8% Unemployment insurance* 2,1% Mandatory funded pension* 1,7% Source: Ministry of Finance
  15. 15. Tax Revenue 2015, million € (collected) * - The amount received by the state + local governments **- transmittable taxes million EURO TAXES State taxes 7 127,8 Direct taxes 4 334,4 Personal income tax* 1 182,5 Corporate income tax 424,3 Social tax 2 392,8 Unemployment insurance payment** 152,1 Mandatory funded pension contribution** 124,7 Land tax** 58,0 Indirect taxes 2 793,6 VAT 1 858,4 Excise duties 873,0 Heavy goods vehicle tax 5,1 Customs tax 34,1 Gambling tax 23,0 Local taxes 13,2 Source: Ministry of Finance
  16. 16. • Income tax (personal and corporate income tax both stipulated in the Income Tax Act) • Social tax • Land tax Direct taxes
  17. 17. Reasons for introducing flat rate in Estonia • High inflation rate - in case of flat rate there is no need of frequent adjustment of tax brackets • Flat rate system is easier to administer (for both taxpayers and tax administrators) • More transparency • The new law entered into force on 1 January 1994.
  18. 18. The outcome…
  19. 19. Personal income tax revenue 1994-2019 million € 0 200 400 600 800 1 000 1 200 1 400 1 600 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016* 2018* Local government State millionEUR Source: Statistical Office of Estonia, Ministry of Finance
  20. 20. Corporate income tax revenue 1995-2019 0 50 100 150 200 250 300 350 400 450 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015* 2017* 2019* 67,1 56,9 78,5 122,3 104,5 54,6 47,8 86,2 137,8 161,2159,5 199,6 261,0266,3 256,3 193,8201,1 252,4 326,6 344,7 424,3 389,4 362,0 382,0 397,0 million EUR * - includes revenue under the prior Income Tax Act (taxable period 1999) million €
  21. 21. • Residents pay tax on their total worldwide income. • Non-residents pay tax only on their income received from Estonian sources. • Individuals are Estonian residents if they: - have a permanent home in Estonia, or - stay in Estonia 183 days or more during any 12-month period. Personal income tax
  22. 22. Personal income tax Period of taxation: a calendar year Tax rate: 20% (separate tax rate 10% for certain pensions and payments to non-residents) Decrease of the income tax rate (both for individuals and legal persons): Until the year 2004 – 26% Income of the year 2005 – 24% Income of the year 2006 – 23% Income of the year 2007 – 22% Income of the years 2008-2014 – 21% Since income of the year 2015 – 20%
  23. 23. Personal income tax Non-taxable minimum (annual basic exemption):2 040 EUR Additional exemption for state pensions: 2 700 EUR Increase of the non-taxable minimum (per year): Income of the year 2003 – 12 000 EEK (767 EUR) Income of the year 2004 – 16 800 EEK (1074 EUR) Income of the year 2005 – 20 400 EEK (1304 EUR) Income of the years 2006- 2007 – 24 000 EEK (1534 EUR) Income of the years 2008- 2010 – 27 000 EEK (1726 EUR) Income of the years 2011- 2014 – 1 728 EUR Income of the year 2015 – 1 848 EUR Income of the year 2016 – 2 040 EUR
  24. 24. 26 24 23 22 21 2019 32 51 64 89 109 128 144 154 170 180 190 0 20 40 60 80 100 120 140 160 180 200 18 20 22 24 26 28 % Income tax rate (left scale) Monthly basic exemption (€, right scale) Income tax reduction
  25. 25. Personal income tax For non-residents there is a limited list of taxable income in the Income Tax Act: • income from work under a labour contract or contractor's agreement in Estonia; • directors' fees; • income from a business carried on in Estonia; • gains from disposal of registered assets located in Estonia; • income from the lease of assets located in Estonia; • royalties; • interest received from the holding in a contractual investment fund, whose property was made up more than 50 per cent of immovables in Estonia (in certain conditions); • income of a sportsman or an artist from his activities in Estonia • pensions and scholarships.
  26. 26. Personal income tax For non-resident individuals • Period of taxation is a calendar year • Tax rates: 20% and 10%
  27. 27. Personal income tax Tax allocation of personal income tax paid by residents • The amount received by local governments is 11.6% of taxable income (deductions are not taken into account), the excess amount is received by the state • Income tax paid on pensions and capital gain is received by the state Non-residents: • income tax is received by the state
  28. 28. Personal income tax Avoidance of double taxation Individuals Exemption method for foreign dividends and certain salary income Credit method for all other types of foreign income
  29. 29. Corporate income tax • Corporate tax reform in year 2000 • The ultimate goal of the reform was promotion of business and acceleration of economic growth by making additional funds available for investment
  30. 30. Corporate income tax Elimination of technical shortcomings Additional funds available for investment Stricter regulation of transfer pricing Acceleration of economic growth Introduction of the CFC rules Transparency and exchange of information
  31. 31. Corporate income tax The moment of taxation of corporate income is postponed until the distribution of the profits The system applies to: • Estonian resident companies - legal persons that are established pursuant to Estonian law • permanent establishments (PE) of non-resident companies - PE is an entity through which the business of a non-resident is carried out in Estonia
  32. 32. Tax rate 26 % (on gross profit) Income tax 26 EUR Dividend payment 74 EUR Profit earned 100 EUR Time The taxation of profit until 1999 Corporate income tax
  33. 33. Income tax 26 EUR Dividend payment 74 EUR Profit earned 100 EUR Tax rate 26/74 (on net amount, equals to 26% of gross profit) No tax Time The timing of tax payment under the new system (in 2000) Corporate income tax
  34. 34. Corporate income tax Tax base • corporate profits distributed in the tax period; dividends and other profit distributions, incl. liquidation proceeds and payments made on reduction of company’s equity or redemption or return of shares • taxable gifts, donations and representation expenses; • expenses and payments unrelated to business. Fringe benefits are taxable at the level of employer. Losses – taken into account (the Estonian Commercial Code does not allow to distribute profits if the company has losses from previous years)
  35. 35. Corporate income tax Tax rate • Tax rate in 2016: 20% (20/80 of the net amount of the dividend or other profit distribution) Period of taxation • calendar month
  36. 36. Corporate income tax + qualified dividend received 100 EUR + foreign interest received 100 EUR (source state WHT 10) Donations 200 EUR Expenses unrelated to business 300 EUR Gifts 100 EUR 1400EURpotentiallytaxableincome Taxliabilitydeferred Profit earned in 2010 200 EUR + Profit earned in 2011 1000 EUR Dividend / liquidation 640 EUR Exemption method Taxable amount 640 – 100 = 540 CIT (20/80) 25 CIT (20/80) 75 CIT (20/80) 50 CIT (20/80) 135 Credit method 135 – 10 = 125 Total CIT liability 275 Time
  37. 37. Corporate income tax There are 3 main methods introduced in the Estonian Income Tax Act, the goal of which is to minimize the possibilities for tax fraud and evasion • CFC (Controlled Foreign Corporation) rules: residents have to declare and pay tax on the income of off-shore companies under their control • Stricter regulations for minimising the use of transfer- pricing schemes • Withholding tax of 20% on all payments to so-called off- shore companies for services
  38. 38. Corporate income tax Avoidance of double taxation Companies and non-resident’s PEs Exemption method for qualified (threshold 10%) profit distributions the income tax will not be charged on dividends or on payments upon reduction of share capital or contributions, redemption of shares or liquidation of a legal person on certain conditions. Credit method for all other types of foreign income
  39. 39. Double tax treaties (DTT) • Estonia has 56 treaties for the avoidance of double taxation (income and capital taxes) in force • Estonia has concluded DTTs with all EU Member States and with most of OECD Member States (except for Australia, Japan, Chile and New Zealand)
  40. 40. Structure of declared corporate income tax 2003-2019 0 100 200 300 400 500 2003 2005 2007 2009 2011 2013 2015 2017* 2019* Payments to non-resident legal persons Non-business expenses Charitable gifts and donations exceeding non-taxable amount Fringe benfits Distributed profit (dividends paid out) million EUR Source: Statistical Office of Estonia, Ministry of Finance
  41. 41. Social tax Tax Base • Employers' payments to individuals (wage income) – tax payable by employers • in cash • in kind (fringe benefits) • Business income of self- employed– tax payable by self- employed persons
  42. 42. Social tax Tax rate • Tax rate is 33 % of the taxable amount Period of taxation • Calendar month for wage income • Calendar year for business income of self- employed Social tax payable is personificated and will be taken into account in making pension payments or health insurance benefits.
  43. 43. • Tax allocation IF the person has joined the II pension pillar (compulsory for the persons who have born in 1983 or later; voluntary for older people) Social tax Social tax, rate 33% (payable by employer or self employed person) State health insurance system 13% 16% State pension insurance system (I pillar) Personal pension account of the person (II pillar) 2% + 4%= 6% 4% Contribution to the II pillar (made by employee) 2%
  44. 44. Social tax revenue and structure million € 0 500 1 000 1 500 2 000 2 500 3 000 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016*2018* Employers'paymentstonaturalpersons Fringe benefits State (accordingto social tax law §6) Businessincome of sole proprietors Social tax million EUR Source: Statistical Office of Estonia, Ministry of Finance
  45. 45. Land tax Tax base • Land tax is paid on all land (with some exemptions) based on the taxable value of land. Taxable person • Tax is paid by land owners and in some cases by the land users Tax rate • Land tax rate is established by the local government and it ranges from 0.1-2.5% of the taxable value of land
  46. 46. Indirect taxes • Value added tax • Alcohol excise duty • Tobacco excise duty • Energy products excise duty • Packaging excise duty (budget revenues insignificant) • Heavy goods vehicle tax • Gambling Tax
  47. 47. Taxable person • Person whose taxable supply (excluding import) exceeds 16 000 EUR in a calendar year • Voluntary compliance possible for anyone, who carries out economic activity in Estonia VAT
  48. 48. Tax base VAT is charged on: • transactions of goods and services within Estonia • intra-Community acquisitions of goods and services • importation of goods and services • provision of services which are taxable in Estonia, supplied by the foreign taxable person VAT
  49. 49. Tax rates Standard rate is 20%. Reduced rate is 9% (books, newspapers, medicines, accommodation). Zero rated: export; intra-Community supply; vessels and aircrafts used on international routes, including equipment and fuel; goods and services for consumption supplied on board of vessels and aircrafts. VAT
  50. 50. Exempted goods and services are: • postal services • health services • social services • insurance services • services for the protection of children • transportation of sick, injured or disabled persons • supply of immovables • the leasing and letting of immovables, etc. VAT
  51. 51. VAT revenue 1994-2019 million € 0 500 1 000 1 500 2 000 2 500 3 000 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016* 2018* million EUR Source: Statistical Office of Estonia, Ministry of Finance
  52. 52. Excise duties Excise duties are levied on: • Alcohol • Tobacco • Fuel • Electricity • Packaging Duty rates on alcohol, tobacco and energy products meet the EU minimum levels
  53. 53. Excise duty rates on alcohol Unit Excise duty rates 01.02.2016 EU minimum excise duty rates Wine and fermented beverage Hectolitre (up to 6 %): 48,55 EUR (> 6 %): 84,67 EUR 0 Beer 1 % alcohol in hectolitre 8,30 (yearly production up to 3000 hl): 4,15 EUR 1,87 EUR Intermediate product Hectolitre 239,12 EUR 45 EUR Other alcohol Hectolitre of pure alcohol 2172 EUR 550 EUR
  54. 54. Excise duty rates on tobacco products Product Excise duty rates 01.01.2016 EU minimum excise duty rates CIGARETTES: 58,00 EUR 90 EUR per 1000 cigarettes, but not less than 60% from weighted average price of cigarettes Specific rate (1000 cigarettes) Ad valorem rate (% of the retail selling price) 30 % Minimal amount of excise to pay (1000 cigarettes) 97,20 EUR Unlimited CIGARS, CIGARILLOS (1000 cigars or cigarillos) 211 EUR 12 EUR or 5% from the retail selling price SMOKING TOBACCO (1 kg ) 65,88 EUR 54 EUR or 46% from the retail selling price
  55. 55. Excise duty on energy products The excise duty rate of: - unleaded and leaded petrol will rise by 10% in 2016-2018; - diesel and light heating oil 14% in 2016 and 10% in 2017-2018; - diesel for specific purposes (agriculture + fishing) the rate will constitute 27% of diesel excise duty rate from 2016; - heavy fuel oil will rise from 15,01 to 58 EUR per 1000 kgs from 2016; - shale oil will rise from 15,01 to 57 EUR per 1000 kgs from 2016; - coal, coke and oil shale form 0,3 EUR to 0,93 EUR per GJ of upper calorific value from 2016.
  56. 56. Excise duty rates on motor fuels Energy product Excise rates in Estonia 01.01.2016 EU minimum excise duty rate Unleaded petrol 465 EUR/ 1000 l 359 EUR/ 1000 l Leaded petrol 465 EUR/ 1000 l Gas oil 448 EUR/ 1000 l 330 EUR/ 1000 l Gas oil for specific purposes 121 EUR/ 1000 l 21 EUR/ 1000 l LPG 125,26 EUR/ 1000 kg 125 EUR/ 1000 kg Petroleum 330,1 EUR/ 1000 l 330 EUR/ 1000 l
  57. 57. Excise duty rates on heating fuels and electricity Energy product Excise rates in Estonia 01.01.2016 EU minimum excise duty rate business non-business Light fuel oil 448 EUR/ 1000 l 21 EUR/ 1000 l 21 EUR/ 1000 l Heavy fuel oil 58 EUR/ 1000 kg 15 EUR/ 1000 kg 15 EUR/ 1000 kg Petroleum 330,1 EUR/ 1000 l - - Natural gas 33,77 EUR/ 1000 m3 0,15 EUR/ GJ 0,3 EUR/ GJ Coal, coke and oil shale 0,93 EUR/ GJ 0,15 EUR/ GJ 0,3 EUR/ GJ Electricity 4,47 EUR/ MWh 0,5 EUR/ MWh 1 EUR/ MWh
  58. 58. Excise duty revenue 1994-2019 million € 0 200 400 600 800 1 000 1 200 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016* 2018* Alcohol Tobacco Fuel million EUR Source: Statistical Office of Estonia, Ministry of Finance
  59. 59. Packaging excise duty Object of taxation: Excise duty on packaging is imposed on packaging launched to the market of Estonia, acquired from another EU Member State or imported into Estonia. Excise is paid by the importer of packages, by the user of packages or by the person acquiring packaging Object of packaging excise duty Excise duty rate in EUR per kilogram Glass and ceramics 0.6 € Plastic 2.5 € Metal 2.5 € Paper 1,2 € Other 1.2 €
  60. 60. Packaging excise duty Excise is not charged: • on alcohol or nonalcoholic beverages packaging with deposit imposed on the packaging under packaging law, of which at least 75 per cent is recovered; • on beverage packaging from metal of which at least 50 per cent is recovered; • on other packaging which is recovered according to the rates of package law § 36.
  61. 61. Heavy Goods Vehicle Tax Mandatory tax imposed by EU law. Object of Heavy Goods Vehicle Tax Trucks or road trains intended for the carriage of goods with a gross laden weight of not less than 12 tonnes which are registered in the traffic register. Tax rate of Heavy Goods Vehicle Tax Minimum rates stipulated in the Directive 1999/62/EC are in effect
  62. 62. Gambling Tax Gambling tax is paid by gambling operators. Period of taxation • calendar month or • the period during which the commercial lottery or a tournament of a game of chance is organised
  63. 63. Gambling tax Object of gambling tax Tax rate Gambling tables for games of chance, (except tables used for tournaments) and gambling machines for games of skill 1278.23 euros per gambling table 31.95 euros per gambling machine Gambling machines for games of chance and the total amount of bets, less the winnings 300 euros per gambling machine and 10 per cent of the total bets made, less the winnings Lottery, the total amount received from the sale of lottery tickets 18% Commercial lottery, the winning pot whose value exceeds 10 000 euros 18% Totaliser, the total amount of bets, less the winnings 5%
  64. 64. Gambling tax Object of gambling tax Tax rate Online game of chance or online game of skill, the total amount of bets, less the winnings 5% Tournament of a game of chance (Gambling Act § 7 (1) 1)), the total amount of participation fees, less the portion accruing to the prize pool; 5% Tournament of a game of chance (Gambling Act § 7 (1) 1) by way of remote gambling, the total amount of participation fees, less the portion accruing to the prize pool 5% Tournament of a game of chance (Gambling Act § 7 (1) 2)), the total amount of participation fees; 5% Tournament of a game of chance (Gambling Act § 7 (1) 2)) by way of remote gambling, the total amount of participation fees. 5%
  65. 65. Customs duty Tax base • Common customs tariff duties are generally applicable to all goods imported into the EU Tax rate • The customs duty rates (ad valorem and specific duty rates) are based on customs value and are dependent on the type of goods and the country of origin • All EU Member States use online customs tariff database TARIC (integrates all measures relating to tariffs, commercial and agricultural legislation) • Information relating to national levies (rates of VAT and excises) can be obtained from Estonian Master Tariff System.
  66. 66. Background information
  67. 67. GDP Growth 2005–2014 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 SK PL LT BG RO EE MT LV LU CZ IE SE UK DE SI AT BE NL EU28 HU FR EZ19 FI CY ES DK PT IT EL 2005–2014 average 2014
  68. 68. Estonian real convergence with the EU (% of EU28 average) 0 10 20 30 40 50 60 70 80 90 2000 2002 2004 2006 2008 2010 2012 2014 SKP per capita PPS Price level Nominal labour productivity per hour worked
  69. 69. Growth expectations GDP growth, % Consumer price index, % 2015 2016 2015 2016 IMF 1.6 2.5 0.2* 1.6* OECD 1.8 2.5 0.1* 1.3* European Commission 1.9 2.6 0.1* 1.8* Ministry of Finance (September 2015) 1.7 2.6 0.2* 2.3* * Harmonised Consumer Price Index (HICP)
  70. 70. General Government budgetary balance 2003-2019 1.8 2.4 1.1 2.9 2.7 -2.7 -2.2 0.2 1.2 -0.3 -0.1 0.8 0.0 -0.1 0.1 0.8 1.4 -4 -2 0 2 4 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 2018* 2019* % of GDP Central Government Local Government Social Security General Government Source: Statistical Office of Estonia, Ministry of Finance
  71. 71. General Government tax burden 1995-2018 36,3 34,3 34,3 34,0 32,5 31,0 30,2 31,0 30,8 30,6 30,6 30,7 31,4 31,9 35,9 34,0 32,3 32,5 32,3 32,4 31,9 31,6 31,6 31,7 0 10 20 30 40 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013* 2015* 2017* Direct taxes Indirect taxes Social security contributions Tax burden % of
  72. 72. General Government debt in 2014 10,4 0 20 40 60 80 100 120 140 160 180 Estonia Luxembourg Bulgaria Romania Latvia Lithuania CzechRepublic Sweden Denmark Poland Slovakia Finland Netherlands Malta Germany Hungary Slovenia Austria Croatia UnitedKingdom France Spain Belgium Ireland Cyprus Portugal Italy Greece % of GDP
  73. 73. Tax rate on low wage earners: Tax wedge on labour cost (single, 67% average wage) 32 34 36 38 40 42 44 46 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014* 2016* 2018* % Estonia Latvia Lithuania EU 27

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