Unique Tax System

A Unique System which Incentivises Value Creation

Estonia has a simple, flat rate tax system which supports operational cash flows and incentivises long-term capital planning. Corporation tax (21%) is payable only on distribution of profit and zero at all other times. Not only does this represent a competitive headline rate, it incentives organisations to retain and re-invest profits at zero cost and allows them to determine when their tax liability is payable.

Estonia also benefits from no Capital Gains tax, competitive Withholding taxes and a wide Double Taxation Treaty network. VAT is charged at 20%, with many financial services and securities transactions subject to exemption. Thin Capitalisation, Transfer pricing and Foreign Controlled Company legislation is also transparent and business friendly.

Another advantage of Estonia is the simplicity of its tax system. A flat rate structure with tax payable only on distribution ensures there is no complex accounting. Moreover as returns and administration can be conducted online there are high levels of efficiency and rebates made in a timely manner.

Having met the criteria for EURO adoption in 2011 and with the government running a budget surplus, Estonia is well placed to sustain its business friendly tax system.