Government endorses excise duty concession for large electricity consumers
The Estonian government at its Thursday meeting approved amendments with which the electricity excise duty rate of energy-intensive industrial companies will be reduced 90 percent from the current €4.47 to €0.50 per megawatt-hour.
"By reducing the excise duty rate, we are helping improve the competitiveness of energy-intensive Estonian companies, as similar concessions have been implemented for large consumers in neighboring countries," Minister of Finance Toomas Tõniste (IRL) said in a press release. "This will hopefully provide a new impetus to the expansion plans of existing companies as well as attract new investments to Estonia."
Energy intensity is measured as the ratio of the business's total expenditure on electricity inclusive of taxes to the value added by the business. Only companies that possess an ISO 50001 energy management certificate and whose energy intensity level is at least 20 percent during the previous financial year can qualify for the reduced tax rate. Both new and already operating companies can likewise apply for the concession on the basis of the estimated figures of the next 12 calendar months.
The company will have to use a sworn auditor, who will review whether the basic data for the calculation of energy intensity as well as whether the calculations are correct. If the necessary level is not achieved, excise duty must be paid at the full rate on the electricity consumed.
The measure is estimated to affect approximately 240 companies, which would need to have an ISO 50001 energy management certificate to qualify.
The impact of the measure on the state budget is to total approximately €3 million next year and approximately €1.8 million per year beginning in 2020.
The amended law is to enter into force on Jan. 1, 2019. Companies to receive the reduced excise duty license in 2019 will also be able to apply for a partial return of excise duty paid on their consumption in 2018.
Editor: Aili Vahtla