Coalition May Tap Eesti Energia Dividends in VAT Dispute
The government coalition is considering increasing the amount of dividends it will take from state-owned power company Eesti Energia in order to patch a 24-million-euro budgetary hole left by VAT deductions on company vehicles.
The government had proposed in its 2014 state budget to the VAT deductions permitted for company vehicles. Currently, business can deduct the full 20 percent VAT on purchases of cars used for work. The proposed reform would have reduced the allowed deduction by half.
However, after resistance from interest groups, Parliament's Finance Committee decided to throw out the measure.
Finance Minister Jürgen Ligi has fought to preserve the measure, but the government is now being forced to consider plan B.
The government had decided a month ago to reduce the amount of dividends it would take from Eesti Energia this year from 74 to 35 million euros, reported Eesti Päevaleht.