Estonia does not plan to tax large multinational digital companies in the coming years because it does not want to introduce new taxes or come into conflict with the US, said Minister of Finance Martin Helme.
"The coalition agreement of this government states that we will not create new taxes. When we talk about a digital tax, one issue is whether or not it can be done, and another is whether we want to do it or not. And the answer is is that at least two parties in this government do not want new taxes," Helme (EKRE) told ERR.
The Estonian Conservative People's Party (EKRE) and Isamaa have previously said they do not want to introduce new taxes.
In addition, Estonia does not want to unilaterally impose a digital tax as it would mainly affect large US companies. As the current US government is heavily opposed to a digital tax on its companies it would create tensions between the two countries which Estonia wants to avoid.
Helme said on the basis of these two objections, he sees little chance of a digital tax being introduced in the coming years.
EU finance ministers have failed to agree on a common approach to large digital companies such as Google, Apple, Facebook and Amazon (collectively known as GAFA), which generate income around the world but do not pay taxes in most countries.
As a result, several major European Union countries have announced they intend to tax these companies themselves. The introduction of taxes across the European Union requires unanimity among countries.
In addition, the introduction of a digital tax is also being discussed within the framework of the Organization for Economic Cooperation and Development (OECD). So far, questions such as who is subject to the digital tax, how it is calculated, who is taxed or what is the tax rate have not been answered.
"If we say that large multinational corporations like banks have to pay taxes in Estonia, we can say that these [digital] companies should also pay taxes in Estonia," said Helme. "But because they are companies with a whole new business model the world has not developed, or at least does not have, a common understanding of how to tax them. America very clearly sees this would be at the expense of their income, which will reduce their tax revenue. And there's a big conflict there," the finance minister said.
In November, during a discussion about Estonia's future tax policy MP Andrei Korobeinik (Centre) said a digital should be discussed.
"Many international companies that are selling services in Estonia pay income tax in their country of domicile. That's what Facebook and Google do, for instance," said he said.
Editor: Helen Wright