Minister: Let's not amend EU tax code until OECD reforms crystallized

Finance minister Keit Pentus-Rosimannus (Reform).
Finance minister Keit Pentus-Rosimannus (Reform). Source: Ken Mürk/ERR

Estonia would ideally wait and see what the outcome of an Organization for Economic Co-operation and Development (OECD)-led global tax reform looks like before making any amendments to the European Union's tax code, finance minister Keit Pentus-Rosimannus (Reform) says.

Pentus-Rosimannus, attending a meeting of EU finance ministers in Brussels Tuesday, said that: "The global tax reform may have an unpredictable impact on the tax systems and investment strategies, both within the EU and outside."

"We should monitor the results of its implementation before taking any major new steps," she went on, arguing in favor of the current corporate tax system that it is: "Simple and efficient. It encourages innovation, growth, and job creation. It is in Estonia's interest to keep it as such.

"Any new tax rules would have to be carefully targeted to avoid undue burden on business," Pentus-Rosimannus went on, according to a ministry press release.

In addition to comments on the EU's Code of Conduct on Business Taxation, Pentus-Rosimannus said that the (OECD-proposed tax reforms required both aspects being implemented in concert with each other.

"It is crucial for the tax on digitalized economy to progress as speedily as the minimum tax. The two pillars form equal parts of the OECD tax deal. Without one, the whole construction will collapse," she went on.

The OECD minimum tax agreement has taken the Estonian tax system into consideration, Pentus-Rosimannus said, but that the EU proposal does not extend the tax beyond what has already been agreed is important, she added.

The European Commission is expected to publish its proposal for the minimum tax directive on December 22, the finance ministry says.

No new details have been announced about the second half of the OECD Statement, the so called digital tax.

The EU's Code of Conduct on Business Taxation, the main focus of this week's meeting, dates back to 1997 and embodies a political commitment by the EU member states to curb tax measures that constitute harmful tax competition.

Extending the code's scope to the general features of a tax system, features which may give rise to a tax exemption or double non-taxation, was also on the table at Tuesday's Brussels meeting.

A member state seeking to introduce a tax incentive that departs from its general tax rules is required to inform the Code of Conduct Group, which will then assess the tax measure.

The debate on amendments to the code had been shelved in the interests of prioritizing the OECD reform.

Estonia agreed in principle to join the OECD reform in October.

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Editor: Andrew Whyte

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