Finance minister: Estonia prepared to stand ground on EU tax reform
Finance minister Keit Pentus-Rosimannus (Reform) says that Estonia is ready to stand its ground on planned European Union corporate tax reforms, adding that these should only in their fullness affect firms with a very large turnover.
The EU directive, which itself implements an Organization for Economic Cooperation and Development (OECD) agreement which Estonia has signed up to, would see a 15 percent tax rate set, where in Estonia corporate income tax on retained and reinvested profits is set at zero.
Pentus-Rosimannus said Wednesday that: "As the EU talks regarding the directive are about to start, we intend to make sure that the change will impact only the large multinationals with a revenue exceeding €750 million, and leave the rest of our existing system untouched," the same day she met with the EU's Director-General for Taxation and Customs Union Gerassimos Thomas on Wednesday, November 24 to discuss the ongoing international tax reform.
"We are keen to maintain our current tax system as it encourages both job creation and innovation," she added, according to a finance ministry press release.
"Even now, our revenue from corporate tax is comparable to that of many large countries where the nominal tax rates are much higher," Pentus-Rosimannus continued, noting that Estonia's adoption of the EU directive on the OECD-led global minimum tax is highly conditional upon the state's options in retaining its current investor-friendly corporate tax system.
"Estonia values fair tax competition and simple efficient tax rules that do not hinder the growth of business," the finance minister added, also cautioning against too wide-ranging and radical a reform, at too rapid a pace. "We wouldn't want the EU to open several tax battlefronts at once", the Minister shared. "It would be reasonable to await the outcome of the one major reform – the global minimum tax – before launching into debates over the next."
In addition to reforms on the global minimum tax, the EU is also planning to amend the Code of Conduct on Business Taxation, aimed at intercepting cross-border schemes directed at either total tax exemption or double non-taxation.
Estonia agreed in principle to join the OECD reform last month.
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Editor: Andrew Whyte