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ESTONIAN TAXES AND TAX STRUCTURE
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Population (01.01.2012)1,339,662 Total area 45,227 km 2 Average salary (2010)792 EUR (2011 IV quarter)865 EUR Currency EUR GDP (2011)15,973 mill EUR Economic growth (forecast for 2013)3.0% GDP per capita (2011) 11,918 EUR Inflation 3.3%
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Outline of the presentation Tax system Direct Taxes Personal Income Tax Corporate Income Tax Social Tax Indirect taxes VAT Excise duties Gambling tax Plans for the future
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Estonian Tax System To achieve sustainable, socially and regionally balanced economic growth Estonian tax system consists of state taxes provided and imposed by tax acts and local taxes imposed by a rural municipality or city council in its administrative territory pursuant to law
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1. income taxes; 2. gambling tax; 3. value added tax; 4. land tax; 5. social tax; 6. customs duty; 7. heavy goods vehicle tax. State taxes
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1) advertisement tax; 2) road and street closure(закрытие) tax; 3) motor vehicle tax; 4) animal tax; 5) entertainment tax; 6) parking charge. Local taxes
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Corporate income tax – 21% on distributed profit Personal income tax – 21% Social tax – 33% (payable by employer) Unemployment insurance payment – 2,8 % payable by employee and 1,4% payable by employer Contribution to the mandatory funded pension system - 2% (payable by employee) Value added tax - 20% (standard rate), 9% (reduced rate) Main tax rates
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Tax structure
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State Budget Tax Revenue 2011 Total tax revenue 4,342.1 million EUR Total revenue 5,872.2 million EUR Source: Ministry of Finance
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Tax Revenue 2011, million € (collected) * - The amount received by the state + local governments Source: Ministry of Finance
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Direct taxes
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Personal income tax Corporate income tax Social tax Land tax Direct taxes
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Personal income tax
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Residents pay tax on their total worldwide income. Non-residents pay tax only on their income received from Estonian sources. Individuals are Estonian residents if they: - have a permanent home in Estonia, or - stay in Estonia 183 days or more during any 12-month period.
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Income Tax Act Period of taxation: a calendar year Tax rate: 21% (separate tax rate 10% for certain pensions and payments to non-residents) Decrease of the income tax rate (both for individuals and legal persons): Until the year 2004 – 26% Income of the year 2005 – 24% Income of the year 2006 – 23% Income of the year 2007 – 22% Since 2008 – 21%
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Income Tax Act Non-taxable minimum (annual basic exemption):1728 EUR Additional exemption for state pensions: 2304 EUR for calendar year Increase of the non-taxable minimum (per year): Income of the year 2003 – 12 000 EEK (767 EUR) Income of the year 2004 – 16 800 EEK (1074 EUR) Income of the year 2005 – 20 400 EEK (1304 EUR) Income of the years 2006- 2007 – 24 000 EEK (1534 EUR) Income of the years 2008- 2010 – 27 000 EEK (1726 EUR) Since 2011 -1728 EUR
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Corporate income tax
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Corporate tax reform in year 2000 The ultimate goal of the reform was promotion of business and acceleration of economic growth by making additional funds available for investment
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Corporate income tax The moment of taxation of corporate income is postponed until the distribution of the profits The system applies to: Estonian resident companies - legal persons that are established pursuant to Estonian law permanent establishments (PE) of non-resident companies - PE is an entity through which the business of a non-resident is carried out in Estonia
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Corporate income tax Tax rate in 2012: 21% Period of taxation: a calendar month
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Social tax
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Tax Base Employers' payments to natural persons (wage income) – tax payable by employers in cash in kind (fringe benefits) Business income of sole proprietors – tax payable by self employed persons
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Social tax Tax rate is 33 % of the taxable amount Social tax payable is personificated and will be taken into account in making pension payments.
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Social tax revenue 1994-2016 million € Source: Ministry of Finance
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Indirect taxes
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Value added tax Alcohol excise duty Tobacco excise duty Energy products excise duty Heavy goods vehicle tax Gambling Tax
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Value-added tax (VAT)
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Taxable person Person whose taxable supply (excluding import) exceeds 16 000 EUR in a calendar year Voluntary compliance possible for anyone, who carries out economic activity in Estonia VAT
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Tax base VAT is charged on: transactions of goods and services within Estonia intra-Community acquisitions of goods and services importation of goods and services provision of services which are taxable in Estonia, supplied by the foreign taxable person VAT
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Tax rates Standard rate is 20%. Reduced rate is 9% (books, newspapers, medicines, accommodation). Zero rated: export; intra-Community supply; vessels and aircrafts used on international routes, including equipment and fuel; goods and services for consumption supplied on board of vessels and aircrafts. VAT
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VAT revenue 1994-2016 million € Source: Statistical Office of Estonia, Ministry of Finance
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Excise duties
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Duty rates Alcohol and tobacco products – all rates meet EU minimum levels Energy products – all rates meet the EU minimum levels except for oil shale for which there is a transitional period up to 2013
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Excise duty rates on tobacco products 01.01.2012
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Gambling Tax
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Gambling tax is paid by gambling operators.
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Gambling Tax Tax rates: 1) for the gambling table – 1 278.23 euro per table in month; 2) for the gambling machine – 447.38 euro per in month euro per gambling machine; 3) 31.95 euro per gambling machine of game of skill; 4) 18 % from the sale of lottery tickets; 5) 18 % from the winning fund of the commercial lottery; 6) 5 % for the toto, amount received from net revenue; 7) 5 % for the online game, amount received from net revenue; 8) 5 % for the tournament of a game of chance (amount received from participation fees).
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Plans for the future
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The main goal for the future- shifting tax burden from income and employment to consumption and environmental taxes
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Thank you for your consideration
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