The draft intention to amend the Electronic Communications Act proposes introducing a turnover-based fee for telecommunications companies, with one of the main goals being to collect additional funds for the Consumer Protection and Technical Regulatory Authority (TTJA). This would allow for the hiring of 12 additional officials to support the existing 27 officials responsible for coordinating the telecommunications sector, according to a statement from the Estonian Association of Information Technology and Telecommunications (ITL).

Under the draft, this fee would apply to telecommunications companies whose annual turnover from communications services exceeds €500,000, at a rate of 0.2 percent of the previous fiscal year's turnover from communications services. Currently, there are about 20 such companies in Estonia.

"At a time when the government has publicly promised to focus on reducing public sector expenses and bureaucracy – commitments also reflected in the coalition agreement – an astonishing plan has been made to increase the number of TTJA officials dealing with the telecommunications sector by 44 percent. ITL urges the government to fulfill the promises of the new coalition agreement in practice and to stop all activities that increase bureaucracy, administrative burdens on companies, the state's cost base and the number of officials in Estonia," said ITL's CEO Doris Põld.

ITL believes that ministries and agencies should avoid all activities and initiatives that increase the burden on businesses and the volume of public sector costs, as well as the duplication of efforts with other government institutions.

According to the CEO, imposing additional covert taxes or fees on top of the already existing corporate income tax and other tax increases is unjustified.

"The competitiveness of Estonian companies is negatively impacted by the bad practice of creating new taxes as needed. The possibility of changing these taxes at will does not add to business confidence. Moreover, we want to remind everyone that telecommunications companies already pay significant taxes to the state budget and, in addition, millions in special fees (such as state fees for frequencies and numbering, as well as auction fees)," said Põld.

Toomas Polli, a board member of ITL, explained that in 2023 alone, telecommunications companies paid more than €1.78 million in state fees for frequency licenses and €2.73 million in state fees for numbering license operations. "In total, companies paid €4.51 million in state fees in just these categories last year. It should also be noted that the state fees for frequency licenses were increased by an average of 23 percent as of July this year, meaning that the revenue from these fees will significantly increase in the current fiscal year. Additionally, if we include the fees from frequency auctions, more than €28 million was paid to the state for the various frequency licenses necessary for offering 5G services," Polli pointed out.

"The state already has the funds to finance the activities of the TTJA, and currently, it is simply looking for justifications to impose a new tax. It must be recognized that all new fees and taxes increase the input costs for companies –
it is not fair to claim otherwise," Põld stated.

According to ITL, the additional work of the TTJA cited in the draft does not in any way support the improvement of access to communications services but instead places an additional burden on telecommunications companies.

"The money from the new fee is not intended for substantial investments but for increasing the state budget's expenses. This raises the question of whether the principles of efficiency, optimization and the need to reduce bureaucracy were considered in drafting this plan," Põld said.

When the Riigikogu Economic Affairs Committee discussed the proposed legislative amendment, Jaak Aab (SDE), who represents the ruling coalition as the committee chair, told ERR that in his view, the fee might not even reach the consumer.

"It is up to the companies to decide whether they pass on the planned fee to the consumer," Aab noted. He added that if they do, the additional cost to the consumer would be in cents.

"It could be a few cents on the monthly bill, no more, if this is fully passed on to the consumer, but I say that it does not have to be passed on," Aab said.

Aab mentioned that the plan received a positive assessment from the Economic Affairs Committee, and he believes it will move forward. He noted that a similar regulatory fee is used in all neighboring countries.

The main services provided by the TTJA to telecommunications companies include planning mobile frequencies, analyzing and regulating telecommunications markets, resolving disputes between companies, publicly involving companies in communications planning, managing communications continuity, cybersecurity, crisis management and resolving radio interference issues.

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