Estonians ponder taxes

  • 2006-03-15
  • From wire reports
TALLINN - The government admitted it had no clear view of what will become of the country's income tax system in 2009 after the transition period for adopting the EU's parent company-subsidiary directive ends. Prime Minister Andrus Ansip and Finance Minister Aivar Soerd admitted at a conference of the Estonian Employers' Confederation in Tallinn last week that the present government has so far not addressed the subject at all.

Ansip suggested that Estonia scrap taxation of dividends in 2009 and carry on as now. "In 2009 we shall stop levying a tax on dividends paid by subsidiaries to parent companies. The corporate income tax will survive. I see no problem here," he said. In his words, nobody said Estonia should give up its tax exemption for reinvested corporate profit.
Soerd said, however, that the solution suggested by the head of government would jeopardize agreements concluded with other countries on avoiding double taxation, which at present amount to 33, with 10 more in preparation. He said a situation could arise in 2009 where other EU member countries begin to levy taxes on the profit of Estonian businesses operating in their territory in accordance with their legislation.