Estonia to terminate agreement on avoidance of double taxation with Belarus

TALLINN - On Thursday the Estonian government decided to support Foreign Minister Margus Tsahkna's proposal to terminate the agreement between Estonia and Belarus on the avoidance of double taxation and the prevention of tax evasion.

The agreement between Belarus and Estonia has been in effect since 1998. It was intended to promote investments between the two countries. However, Belarus has unilaterally violated the agreement by partially suspending its application to Estonian residents, spokespeople for the government said. After the agreement is terminated, income earned by residents of both countries will be taxed according to their respective national tax laws, without the protection provided by avoidance of double taxation.

"The termination of the Belarus double taxation avoidance agreement is a message that companies and residents of a country involved in an aggressive war will not receive tax benefits in Estonia," Tsahkna said in a press release.

"Since 2022, Belarus has been involved in Russia's aggression against Ukraine, violating norms that are fundamental to international law. This kind of action must be resisted in every way. In addition to other measures, we will also do this through the termination of the bilateral double taxation agreement,” he said.

"Considering the general number of taxpayers, the termination of the agreement will affect a relatively small group of people, primarily Belarusian residents who receive pensions from Estonia. There are very few Estonian companies still operating in Belarus," Tsahkna noted.

The termination of the tax agreement will take effect at the beginning of the new calendar year, and at least six months' notice is required. If the Riigikogu adopts the law in June and the president proclaims it, Estonia will notify Belarus before the end of June, and the agreement will terminate on Jan. 1, 2026.