Overview of the Estonian taxation system
If you are doing business in Estonia, you will be responsible for paying taxes in accordance with the tax legislation in force in Estonia. Property, income and benefits are taxable. The general rule is that all companies are taxed equally and on the same substantive basis.
Types of taxes
State and local taxes
Local taxes may be established by a local government – for instance, on the use of infrastructure or other resources in a certain region. State taxes include income tax, social tax, land tax, gambling tax, value-added tax, customs duty, excise duties and heavy goods vehicle tax.
Direct and indirect taxes
In the case of a direct tax, your company will have to bear the tax obligation. This applies to income tax, land tax and heavy goods vehicle tax.
In the case of indirect tax, the end consumer is responsible for paying the tax, and the tax is reflected in the form of an increased price on goods or services. Such taxes include value-added tax, excise duties and customs duty.
List of corporate taxes
As to which taxes have to be paid at which rate, this depends on the specific characteristics of your company.
- Income tax
- Value-added tax
- Social tax
- Customs tax and excise duties
- Unemployment insurance premium
- Environmental charges
- Taxes payable in the case of cross-border operations
- Other taxes
Tax collection and review
Taxes are assessed and collected, reviewed and enforced by the Tax and Customs Board, and by local governments in the case of local taxes. If taxes are not paid, not paid on time or paid incorrectly, it is possible that you will be assessed penalties, interest or fines for delay. Companies are required to keep accurate accounting and tax records and file statements and submit tax declarations as required. The Tax and Customs Board and local government must receive, within a reasonable amount of time, an overview of the business transactions conducted by a company as well as of key related aspects (income, expenses, assets and liabilities).
If you begin cooperation with new partners, it would be wise first to verify whether they have paid all taxes to the government as required. Estonia’s credit reporting agency Krediidiinfo issues credit reports on companies’ credit rating, credit limits and payment problems and offers access to companies’ annual reports. There is a fee for Krediidiinfo services.
All of the important tax-related dates for companies are listed in a tax calendar compiled by the Tax and Customs Board. Keeping track of the calendar helps company executives and financial officers file declarations in a timely manner and pay taxes as required.