Amount of taxes paid in May down 6 percent from last year

According to the Estonian Tax and Customs Board (MTA), a total of €634.7 million was paid in taxes in the month of May, which is 6 percent less than in May of 2019.

The Ministry of Finance said on Monday that after the first five months of 2020, 40.4 percent of the full-year tax revenue target set with the supplementary budget had been met. Furthermore, the impact of the emergency situation caused by the outbreak of coronavirus is reflected less in the excise duty and VAT figures for May than they were in the figures for April.

According to the ministry, more tax revenue has flowed in during the first five months of the year than was planned at the time when the supplementary budget was drafted, mainly as a result of the additional labor market measures. However, a steeper decline in labor tax intake will presumably take place in the second half of the year.

A drop of 7.3 percent in the average wages and salaries was registered in May. Combined with the remuneration compensation paid by the Unemployment Insurance Fund (Töötukassa), residents' incomes grew year over year, however.

Speaking of the major sectors, wages declined the most in retail - by 16.7 percent, whereas speaking also of minor sectors, wages in accommodation and catering plummeted 59.3 percent. 

The decline registered in receipts of social tax in April was replaced by an increase of 1.1 percent in May, underpinned both by a reduction in arrears as well as social tax paid on remuneration compensation by the Unemployment Insurance Fund in the amount of €28 million.

Receipts of income tax on physical persons grew by 6 percent on year due to the compensation paid by the Unemployment Insurance Fund, on which income tax is not withheld on a current basis.   

Receipts of the income tax of legal persons declined by €32 million or 52 percent as both the profits distributed by the private sector and receipts on fringe benefits declined. 

Of excise duties, €79.5 million was paid into the state budget in May, which is 8.5 percent less than in the same month the year before. Of the major items under excise duties, the biggest reductions were registered in receipts of alcohol and tobacco excise duty, which dropped respectively by 16.4 percent and 12.8 percent. 

Receipts of the fuel excise duty are influenced by the tax cut for diesel, fiscally marked diesel and natural gas effective since May, which is one of the government's anti-crisis measures and will remain in effect until April 30 2022 The sale of diesel to end consumers increased by 25 percent compared with April and is consistent with the sales volumes registered in 2019. 

VAT receipts in the five months were smaller by 9.5 percent compared with the same period last year. Where in March and April, VAT receipts plummeted respectively by 15.8 percent and 20.4 percent compared with the same month last year, in May the annual rate of decline was just 3.7 percent.

VAT receipts were supported, among other things, by a reduction in arrears by €7 million compared with April to €196 million at the end of May. VAT arrears are biggest in retail and wholesale and in construction, amounting to respectively €72 million and €28 million. 

The biggest contributors to better intake of VAT in May were retail sales and financial services, which saw annual rates of increase of respectively 17 percent and 204 percent. The increase in VAT receipts in retail was underpinned by increased sales in non-specialized stores, meaning retail chains, and a reduction in acquisitions year over year.

The increase in the provision of financial services was the result of a reduction in acquisitions by financial lease and credit institutions, due to which refunds made to companies decreased significantly. The reduction in acquisitions in said field was caused by the restrictions arising from the emergency situation, which resulted in lower economic activity and a lower number of financial transactions. 

In important major sectors, such as the sale of motor vehicles and wholesale, the payment of VAT has decreased significantly -- by 44.5 percent and 24 percent respectively. The reduction in the sale of motor vehicles was foremost the result of a reduction in the sale of cars and small vans, whereas the reduction in wholesale mainly resulted from a €50 million reduction in the wholesale of motor fuel. 

Corporate turnovers declined by 22.4 percent overall in May, the decline was broad-based and steeper by 3.6 percentage points than in April. The reduction can be partially attributed to the fact that the restrictions on movement and economic activity related to the emergency situation were in full effect until May 17.  

Turnovers are expected to be gradually restored starting from June. 

In absolute terms, the biggest decline in turnover was seen in trade and manufacturing - by €328 million and €285 million respectively. Retail and wholesale was affected the most by a reduction in the sale of motor fuel and liquid and gaseous fuels. In industry, the wood industry, specifically a steep reduction in the manufacture of modular woodhouses and components thereof had the biggest negative effect.

Turnovers increased in year-to-year comparison in telecommunications, research and development activity, postal and courier services and in the organization of gambling and betting.

According to card payment statistics by the Bank of Estonia (Eesti Pank), the turnover of e-commerce in Estonia grew by 24.2 percent in the first five months of this year. In May the increase slowed down only a bit compared with the previous months to 18.3 percent.

Purchases made from Estonian e-stores numbered 1.5 million in May, which was largely on a par with May 2019. The average size of a transaction, however, rose from €37 to €44. In absolute terms, the volume of e-commerce grew by €10.3 million year on year to €66.5 million in May. 

E-purchases from other countries, including other EU member states and third countries, declined by 9 percent compared with the first five months of 2019. The volume of e-commerce purchases made by Estonians at foreign e-stores started to decline in March and the decline accelerated to 26 percent in May.

Even though the share of e-commerce keeps increasing in Estonia, the total turnover of e-stores still remains smaller than 5 percent of total retail turnover. 

The government sector's budgetary deficit at the end of May stood at €816 million, equaling 3.1 percent of gross domestic product. Compared with the end of May 2019, the deficit was bigger by €710 million, which is mostly the result of a reduction in tax receipts by €200 million compared with 2019. 

In addition, revenues of the state have been affected by smaller income from the sale of property, environmental fees, and the sale of carbon emission credits. Outlays of the state budget have been increased by payouts under the crisis mitigation measures.

The impact of the crisis is reflected also in the position of the Unemployment Insurance Fund, which was negative to the amount of €150 million at the end of May. 

Philip Morris emerges as Estonia's largest taxpayer in second quarter of 2020

The largest corporate taxpayer in Estonia in the second quarter of 2020 was tobacco seller Philip Morris Eesti OÜ, which paid a total of €31.9 million in state and labor taxes during the three-month period. 

According to data from the MTA, among the ten largest corporate taxpayers were four fuel retail and wholesale companies-  AS Olerex Terminal, Neste Eesti AS, AS Tartu Terminal and Petroil PVTK OÜ - which paid altogether €93 million in state taxes and labor taxes in the second quarter.

In addition to the fuel wholesale companies, other top corporate taxpayers included telecom operator Telia Eesti AS, wholesale company Sanitex OÜ, Swedbank AS, as well as retail chains Maxima Eesti OÜ and Rimi Eesti Food AS.

The ten largest corporate taxpayers paid altogether €237.5 million in state taxes and labor taxes in the three months.

NameState taxes (€)Labor taxes and contributions (€)Total (€)
Philip Morris Eesti OÜ31,829,62486,58631,916,210
Telia Eesti AS22,890,9098,015,87930,906,788
AS Olerex Terminal30,417,230163,76930,580,999
Sanitex OÜ25,261,982565,08025,827,061
Neste Eesti AS25,330,753228,79325,559,546
AS Tartu Terminal23,463,183267,78023,730,963
Swedbank AS13,081,4908,695,68921,777,179
Maxima Eesti OÜ15,384,5364,298,09119,682,627
Rimi Eesti Food AS10,961,7503,415,23414,376,985
Petroil PVTK OÜ13,141,64111,97013,153,611 



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Editor: Kristjan Kallaste

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