Estonian president promulgates much-disputed competition law amendments

TALLINN - Estonian President Alar Karis on Thursday promulgated ten laws concerning, respectively, the contestation of visa decisions, the cancelation of the security tax, this year's supplementary budget, the acceleration of the deployment of renewable energy and the authorization of radiation-causing activities, as well as laws on offline card payments, the use of sustainable aviation fuels, instant payments, the processing of state secrets and the much-disputed competition law.

The amendments to the Competition Act and other associated acts, initiated by the government, transpose the directive organizing the procedure for processing infringements of competition law, using the structures of existing law. The directive aims to empower national competition authorities to effectively enforce competition rules and ensure the proper functioning of the internal market. Existing Estonian law has not so far been in line with the directive. The law establishes an administrative competition review procedure and sanctions are imposed in misdemeanor proceedings, similar to other areas where administrative fines should be imposed under EU law. Competition infringements will no longer be criminal offenses.

The amendments to the Aliens Act, the Code of Administrative Court Procedure and the State Fees Act, initiated by the government, establish the right of decisions to refuse to issue a visa to be challenged in court. At present, the applicant has no right to apply to the courts in the event of refusal to issue a visa.

The amendments to the Simplified Business Income Taxation Act and the Income Tax Act and the Repeal of the Security Tax, initiated by the government, repeal the security tax which was originally planned to be in effect until the end of 2028. Instead of a security tax, the general income tax rate will rise to 24 per cent and the corporate income tax rate to 22 percent from 2026 to ensure stable financing of the state's defense spending and long-term strengthening of defense capabilities. The VAT rate increase to 24 percent from July 2025, which will become indefinite, will also remain in effect.

The law on the supplementary state budget for 2025, initiated by the government, increases state budget revenues by 26.6 million euros, expenditures by 36.9 million euros and investments by 42.0 million euros.

The purpose of the amendments to the Planning Act and Other Acts, initiated by the government, is to promote the deployment of renewable energy. The amendments are intended to facilitate the processing of national designated spatial plans and municipal designated spatial plans planning wind farms and to ensure legal clarity in this process.

The amendments to the Radiation Act and other associated acts, initiated by the government, introduce a very low risk radiation practice as a practice of a new risk level and in the case of it registration of the practice will be required instead of a radiation practice license.

The purpose of the amendments to the Law of Obligations Act and other acts arising therefrom, initiated by the government, is to allow people to use their bank cards in certain shops, gas stations and pharmacies in an emergency, even if the internet service is interrupted. Under the law, the banks selected as critical entities will also have to offer customers offline card payment options: the bank will have to set an offline individual limit on the chip of the customer’s bank card, and merchants’ payment terminals will have to be able to process offline card payments.

The amendments to the Liquid Fuel Act, initiated by the government, promote the use of sustainable aviation fuels in commercial air transport and brings the Act into line with the European Union regulation on ensuring a level playing field for sustainable air transport.

The purpose of the amendments to the Payment Institutions and E-money Institutions Act and the Payment and Settlement Systems Act, initiated by the government, is to give payment and e-money institutions access to settlement systems that enable instant payment services. The amendments transpose the amendments to the Payment Services Directive and the Settlement Finality Directive and ensure the proper national implementation of these directives. The Financial Supervision Authority will have the right to verify compliance with the requirements of the regulation. Currently, only banks offer instant payment services, as only they have access to the necessary current accounts at the Bank of Estonia.

The main objective of the amendments to the State Secrets and Classified Information of Foreign States Act, the Public Procurement Act and the State Fees Act, initiated by the government, is to update the State Secrets and Classified Information of Foreign States Act so that applying for facility security clearances would be more flexible than before. The amendments improve the quality and consistency of the authorization to assess the trustworthiness and reliability of legal entities and to handle state secrets. In the changed security situation, allied countries are expecting ever closer scrutiny of Estonia’s legal entities and supply chains so that our credibility would be ensured.