Läänemets said most of the budget could be agreed upon today, but one of the main questions left unanswered is how the new defense tax will be implemented.

Businesses have suggested removing the 2 percent tax on companies' profits from the defense tax and replacing it with an asset tax paid when submitting an annual report.

"SDE have so far supported a version of the defense tax that touches on the profit tax in corporate taxation. This has been the position of our leadership. Entrepreneurs themselves have proposed a property tax. They call it a levy. We have discussed with the party that if we can get an agreement with the Employers' Confederation that the minimum wage will rise next year by as much as has been agreed with the trade unions, i.e. by about 12 percent, then I do not rule out that the Social Democrats will support this proposal from the business community," he said on Thursday morning's "Terevisioon."

Läänemets said a rise of 12 percent will help combat price increases. Especially people on lower wages.

In 2024, the minimum wage for full-time employment is €820 and the minimum hourly wage is €4.86. 

"Today [Thursday] we can discuss it. If the Social Democrats change their position a bit and business opposes an increase in the minimum wage, then we can make that decision," Läänemets said.

He said the corporate asset tax would not be new, and has already been adopted by other European countries. Although, when pressed, he could not name specific countries.

"But there are certainly challenges in that certain sectors will be more affected, such as banks and real estate companies that have a lot of assets. In the case of the banks, we also know that they have had extraordinary profits," said the chairman.

He added the defense tax is limited to three years and can be adjusted later.

Estonian business organizations have proposed that the portion of the defense tax related to corporate profits be replaced with a temporary fee or charge to be paid by all legal entities when submitting their annual financial reports.

The fee would depend on the balance sheet total of the legal entity, and according to the estimate, the annual revenue for the state would be around €210 million.

Reform, SDE and Eesti 200 have agreed the defense tax will start next year and end on December 31, 2028.

It consists of three parts: 2 percent of turnover from 1 July 2025,
2 percent on personal income from January 1, 2026, and 2 percent of companies' profits from January 1, 2026.

The corporate property tax would be a new element not included in the existing coalition agreement.

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