Estonian media companies would certainly be very interested to know the amount of revenue earned by their competitors in the advertising market. However, according to Karin Ulvik, media specialist at the Estonian Tax and Customs Board, the board "unfortunately does not have aggregated information on such a narrowly defined group of companies".

To collect this information would even require a change in the law.

"Estonian companies that have to declare and/or pay VAT on services purchased from abroad on behalf of the seller, are not obliged to break down these transactions by counterparty in the way they have to for transactions made in Estonia. It seems that Latvian legislation differs from Estonian legislation in this respect. That is, Latvia there is an obligation to declare the relevant data. In Estonia, to obtain data similar to that available in Latvia would require a change to the VAT laws," Ulvik said.

According to Eesti Ekspress Grupp CEO Mari-Liis Rüütsalu, both the lack of information and unwillingness to attain it, is a problem in Estonia.

"I haven't seen any attempts to somehow understand the volume of revenue that is going out of Estonia to digital platforms. As long as these numbers are not available in black and white, the problem will continue to be ignored," Rüütsalu said.

In Rüütsalu's view, there are two ways in which platform revenues in Estonia can be obtained, even indirectly.

"For example, we can compare ourselves with Latvia, which is already publishing the revenue that has gone to platforms, for the fourth or fifth year. These numbers are published by the Latvian Advertising Association (LRA) and come from the Latvian tax office. Last year the figure was €416 million. This figure also includes other services bought from these platforms, such as Facebook Markets and others," said Rüütsalu.

Another approach to estimate revenue size could be via advertising sales partner HTTPool, suggested Rüütsalu.

"This is a company registered in Latvia, which has a subsidiary in Estonia. The turnover of this Estonian operation last year was over €200 million. Of the bigger platforms, they represent as well as Spotify and Instagram, though these are smaller in size. Facebook and Google are still the biggest players [in the Estonian market], but HTTPool doesn't even represent Google. And if the turnover of this company is more than €200 million, from here in Estonia, then it could well be, that the revenue going from Estonia to these platforms is the same the total amount that has been calculated in Latvia," Rüütsalu analyzed.

From the fall onwards, HTTPool will no longer represent Facebook in the Baltics. "This does not, of course, remove the problem. Previously, some revenue was received through HTTPool in the form of taxes, however, now Facebook will serve the Baltic markets directly," Rüütsalu said.

"The advertising revenues of Ekspress Grupp companies have been rising, but that doesn't mean that this will somehow eliminate the problems we have with hundreds of millions being taken out of the country. If this money were taxed, then [media companies] would not benefit in any significant way, however, it would just level the playing field for us. The state would receive tens of millions in extra revenue and there would be no need to pressure local businesses by raising taxes," Rüütsalu said.

Šmutov: State should tax digital outlets

Martin Šmutov editor-in-chief of Estonian daily newspaper Õhtuleht, shares the same view as Rüütsalu. Šmutov said, that the competitive situation for media outlets in Estonia is exceptionally poor, when compared to that of the world's international digital giants.

In Šmutov's view, Estonia should tax the profits of digital media outlets as a matter of urgency, rather than waiting for the introduction of a pan-European digital tax.

"The state's failure to tax advertising revenue where it is generated gives Facebook and Google a huge competitive advantage and leaves the state with nothing. It's incomprehensible why people are waiting for a pan-European solution, like a white ship that may never reach its destination. This is an issue that the government and relevant ministry should be concrete on and should have acted on already," said Šmutov.

At the same time, the European Union, is looking forward to the introduction of a global digital tax. Back in May, European Commission Vice President Margrethe Vestager told ERR that she believes an international agreement is possible.

While the media seem to trust the information provided by the Latvian tax authorities, some market research experts are not so sure that the Estonian and Latvian figures are in any way comparable.

This is, at least partly, because the Latvian tax authorities have, according to some, not examined the figures more closely, nor correlated them with the advertising market in their own country. It is therefore more difficult to decipher the meaning of the €416 million figure.

On research firm chief, who spoke to ERR said, that for now, all the talk about the revenues of digital platforms outside Estonia is speculation. No one has seen the real figures and those who have are keeping quiet.

The expert also pointed out, that no affected party has been interested enough to commission an Estonian research company to conduct a study into the revenues of digital platforms in Estonia.

He also thinks that, if the numbers are known, how this information will be used in the future would also be important. At the same time, the expert was of the opinion that there was no reason to introduce a digital tax solely in Estonia.

According to polling company Kantar Emor, the total size of the Estonian advertising market in 2021 was €88.7 million. No survey was conducted in 2022. The gap between domestic advertisers in the online advertising market and the money taken by Google and Facebook is getting smaller every year , with the local online advertising market worth €21.3 million in 2022.

In addition to the local online advertising market, around €16.2 million of advertising money was channeled out of Estonia in 2021 through 14 major agencies.

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