SDE proposes advance taxation of some corporate profit ({{commentsTotal}})

Chairman of Social Democrats Sven Mikser Source: Photo: Postimees/Scanpix

The Social Democrats have released a raft of tax proposals that would introduce some corporate taxation and not require companies to pay the health insurance component in the social tax for some employees, according to business daily Äripäev.

The junior party in the coalition plans a reform of the current system where retained earnings are tax-exempt: the Social Dem plan is for companies that have been in business for at least three years and have equity of at least 30,000 euros to be subject to a 7 percent tax rate. Paid tax would be deductible from the tax obligation arising upon payment of dividends, the paper said.

"Such a corporate income taxation system would impact large companies that do not distribute profits regularly. For example, the four largest banks in Estonia would have paid about 70 million euros according to this system in the yeras 2010-2012," said Rannar Vassiljev, MP and chair of the finance and economic affairs committee.

The party also plans to exempt lower-competitive workers from the health care component of the social tax (13 percent of the salary) if they have health insurance guaranteed even if they did not have a job. Such employees include students, pensioners and people with limited working capacity.

Another plan involves abolishing the required minimum on the pension insurance component of the social tax to make it easier for employers to create part-time jobs. And it's planned to lower the social tax rate to 30 percent (from the regular 33 percent) for workers who live and work outside the capital region.

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