State hopes to reclaim €8 million a year in lost tax with e-invoices

The joint ministries, which contains the Ministry of Finance, building in Tallinn.
The joint ministries, which contains the Ministry of Finance, building in Tallinn. Source: Siim Lõvi /ERR

The government is hoping to gain between €6-8 million in lost tax revenues every year with the introduction of obligatory e-invoices. But small businesses say this will make accounting more expensive for them.

Requiring all businesses to complete e-voices will make it harder to evade paying taxes, officials believe.

The state has created a portal that can be used by micro and small businesses, as well as state institutions. For a fee.

"Today, we have around 34,000 customers, 11,000 of whom use e-Financials as their accounting software on a daily basis. Including 5,000 customers who use e-Financials not as an accounting software but as an e-invoice operator service, which we actually offer on the market," said Aleksandr Beloussov, head of the Center of Registers and Information Systems zero reporting team.

But, not all entrepreneurs are enthusiastic about this new service.

"Accountants who have been exposed to the service provided by the state know that it is from the Stone Age and does not compare to the ease of use and practicality of real accounting software. It takes a lot of time and determination to get things done there," said Tiit Niilo, owner of Nopri farm.

Beloussov said the service is orientated towards small and micro businesses and may not be able to offer everything these firms want. He said dissatisfaction may be linked to functionality.

However, entrepreneurs will also not be forced to use this system.

"There are five e-invoice operators in Estonia. In fact, e-invoices are sent via the e-invoice operator network. If the business software is interfaced with one of the e-invoice operators, this means that the customer can use their services and send e-invoices and receive e-invoices from them," said Beloussov.

Niilo's family firm Nopri Talumeierei uses a different service. However, he does not think the state should be able to force micro-enterprises to send and receive e-invoices.

"Some lack both capacity and accounting software. And therefore those who either settle in cash or do their accounts once a year should not immediately become subject to a new obligation," said Niilo.

More than 90 percent of Estonian companies are defined as small or micro companies. Many of them use invoices prepared in Word or Excel and send them by email. They do not see the need for state intervention.

Additionally, companies say this will create extra costs.

The Chamber of Commerce and Industry thinks the new requirement violates the terms of the Constitution.

"We don't see anywhere what a big positive change would come if we move to e-invoicing across the board, including in the private sector, and paid all these costs. In the private sector, whatever form the invoice takes, as long as the requirements of the original accounting document are met, I think that is quite sufficient, and that is something Estonia could continue to do," said Mait Palts, head of the chamber.

The Ministry of Finance told "Aktuaalne kaamera" that the legislation is still in its early planning phase. It is expected to come into effect in 2025.


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Editor: Marko Tooming, Helen Wright

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