Personal advisory conversations regarding the risk of untaxed wages were held with the managers of 6,233 businesses, following which one third improved their tax behavior and the payment of labor taxes by these entities improved significantly, spokespeople for the MTA said on Monday.

Oscar Õun, head of the MTA's Tax Audit Department, said that while achievements can be seen in the fight against untaxed wages, the problem as a whole is difficult to eliminate.

"Under-the-table wages continue to be the biggest tax problem in Estonia," Õun said.

An estimated 6 percent of employees in Estonia are paid under the table, i.e. in cash, he noted, resulting in €86 million in lost tax revenue annually.

"According to our risk analysis, 23 percent of companies active in Estonia, or nearly one in four companies, have a tax risk related to remuneration for labor," he said.

Õun described public procurements in construction, and seeing to it that the state itself doesn't use the services of dishonest business operators, as one important course of action taken by the tax authority in combating under-the-table wages.

It's also worth remembering that there are always two sides — the employer and the employee — involved in the payment of untaxed wages. In its practices, the MTA is guided by the principle that when an employee has knowingly accepted untaxed wages or has even demanded to be paid thus, the employee is equally responsible alongside the employer for the income tax not paid on their wages.

Õun described low tax awareness among young people and their increased willingness to work for untaxed wages as cause for concern, as in a recent tax survey, 60 percent of young respondents displayed a tolerant attitude toward under-the-table wages.

"Although we are actively paying visits to schools and conducting campaigns aimed at young people, we have to make an even greater contribution to improving the will to pay taxes and the awareness of future taxpayers in order for them not to agree to receive their wages under the table when entering the labor market," he added.

Combating untaxed wages is one of the most important parts of the MTA's work, as the tax authority's goal is to reduce the share of recipients of under-the-table wages to 4 percent by 2021.

Business daily Äripäev (link in Estonian) and online news portal Ärileht (link in Estonian) likewise reported on the issue.

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