In the ministry's estimation, doing so would improve the business environment and cut the administrative burden to both businesses and the tax authority (MTA).

However, according to the Estonian Chamber of Commerce and Industry (Eesti Kaubandus-tööstuskoda), the additional tax revenue may not outweigh the increased administrative burden, and the changes will inevitably raise businesses' expenses on software and services.

Mait Palts, the chamber's director, told ERR that the estimated increase in tax revenue remains speculative.

"About €2 million is expected to come from e-invoices and approximately €4 million from additional invoice declarations. The rest is projected to result from internal efficiency gains at the tax authority."

"Efficiency and savings are certainly important, but from businesses' side, it is likely that the associated costs will be significantly higher and may not impact the economy positively," he said.

Palts also noted that while invoice declaration is not likely to be technically challenging, the added administrative burden could raise concerns.

The bigger problem lies with e-invoices, which are used by very few organizations. Efforts should focus first on increasing their adoption, not making them mandatory.

"Right now, it feels as though the state views entrepreneurs as slightly ignorant and unaware of the great benefits e-invoices could bring them. To teach them this wisdom, e-invoices are being made mandatory," said Palts.

"But you could also approach it differently by making certain services so simple that everyone immediately realizes that when they start using e-invoices they can gain significant savings in both money and time."

e-invoices raise numerous questions and technical details that need resolution.

Palts pointed out that the €2 million in estimated tax revenue is unlikely to outweigh the additional administrative burden.

"For instance, how will retail work? If a business owner buys a pack of toilet paper, how will they record that receipt as an e-invoice in their accounting system?" Palts inquired.

"The problem is especially evident in small shops and regions where operations have so far relied purely on paper and where automated systems, like customer cards or other methods, are lacking," he noted.

Larger companies may find the benefits easier to identify, but even they might need to upgrade their IT systems.

"Since a large proportion of companies operating in Estonia are small businesses, the issue of additional costs is problematic," Palts said.

The Chamber of Commerce and Industry has not yet received widespread feedback on the plan from its members, however.

According to the Ministry of Finance, the volume of transactions below the €1,000 threshold remains "large."

For example, as of December last year, approximately 90,000 taxpayers declared input VAT totaling €327 million from undeclared transactions below that threshold.

The Ministry of Finance also reports that the use of e-invoices has grown gradually, though only 7 percent of taxpayers are registered as accepting them.

The EU is addressing the issue too; starting July 1, 2030, e-invoices will be mandatory for cross-border transactions.

The Ministry of Finance made the proposal to axe the €1,000 transaction reporting threshold and mandating e-invoicing earlier this month. The ministry says the measures could increase tax revenue by €16.6 million per year.

--

Follow ERR News on Facebook and Twitter and never miss an update!