Starting the year after next, the largest commercial banks operating in Estonia, whose profits reached hundreds of millions of euros last year, are expected to pay the highest amounts of the new profit tax.

In addition to banks, the Ministry of Finance has compiled a top 50 list of the most profitable companies based on last year's data. In second place on the list is Bolt Operations, and in sixth place is Telia Eesti.

"In terms of numbers, for us, this means a tax of €1.2 million. Last year, we actually paid €132 million in state and labor taxes, so we are already contributing to the state in various ways, and now we can manage this tax as well," said Telia Eesti CEO Holger Haljand.

The first well-known manufacturing company on the list is Merko Ehitus, which has accounted for the new tax.

"This is definitely a burden, but again, it's a matter of paying a small portion of the profit we've already earned. The question for all of us is how much we are willing to contribute to national defense. If we want to have our own country, to have a reason to work and invest, I think it's acceptable," said Ivo Volkov, CEO of Merko Ehitus.

According to Statistics Estonia, there are 145,000 active companies in Estonia, of which about 60 percent are profitable.

Ninety-nine percent of Estonian businesses are small or medium-sized, and in terms of profit tax, they contribute at the lower end. For example, the workplace consultancy firm Tondihobu made a profit of €20,000 last year.

"This year, the figure will likely be about the same, meaning a profit tax of around €400. As a business owner, that's not the end of the world for the good of our country. Especially when contributing to national defense, I have no objections," said Ille Nakurt-Murumaa, a small business owner and president of the Estonian Association of Small and Medium Enterprises (EVEA).

However, for some small businesses, paying the profit tax will be more difficult.

"Profit is an accounting figure, which means there might not be real money in my bank account. Profit can be on paper, and paying 2 percent of that can be quite painful," Nakurt-Murumaa explained.

Lahepere Villa, a bed and breakfast and restaurant located in Kloogaranna near Tallinn, is focused on offering the best service possible. The villa's owner, Helen Vihtol, mentioned that while their position in the hotel and restaurant sector is strong due to high visitor numbers, she worries about how businesses with fewer customers will cope.

"In 2024, the VAT on food services increased by 2 percent. Now it's going up another 2 percent, and corporate income tax is rising as well, which we absorb instead of passing on to employees. Then, the VAT on accommodations is increasing by 4 percent. When you add this all together – the monthly cost base, inflation and all other tax increases – I just don't see how there will be anything left. This tax only works for those who have something to pay," Vihtol commented.

Entrepreneurs have more general opinions about the profit tax.

"We need money for national security, and entrepreneurs have been asked to contribute. Entrepreneurs are willing to do so. Among all the options, a profit tax is certainly the best – it's based on what remains from your economic activity, and you can share from that," said Ivo Volkov.

"If we make these tax changes, they need to go to the right place. Transparency and credibility are very important now – the state needs to show that we are genuinely using this money for the right reasons, specifically for national defense," added Holger Haljand.

"Entrepreneurs today don't really trust the state. We all understand that the profit tax is here to stay, and the only temporary thing is likely the percentage. I think most entrepreneurs could swallow the 2 percent without too much difficulty if we could be sure that it will indeed stay at 2 percent," Nakurt-Murumaa said.

"I would gladly contribute to national defense in some other way, but the reality is that our sector has been squeezed so hard that there's nothing left to take," said Helen Vihtol.

According to Hannes Lentsius, head of tax consulting at PricewaterhouseCoopers, the government has chosen the most reasonable option among three bad tax alternatives. However, there could be abuses since it's possible to hide profits through accounting.

"Administering the tax is certainly complicated because enacting a tax doesn't just mean writing the tax rate into law. The tax must be collected and monitored," said Lentsius.

Lentsius also noted that this tax alone won't solve the state's financial shortfall, and other sources of tax revenue should be explored.

"We shouldn't forget other potential tax collection points. One is to collect the existing tax more efficiently. But secondly, we could restart the discussion about different digital service taxes. Whether it's ride-sharing platforms or digital advertising revenue earned by tech giants in Estonia," Lentsius explained.

While a European Union-wide digital tax failed, some countries have now begun introducing their own, Lentsius said.

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