Estonia, Latvia, and starting from this year Poland (partly) are taxing profits earned by companies only at the dividend payout time. Such a model promises to raise both domestic and foreign investment, and it can help the economy recover from the crisis more quickly. The opponents of this taxation system in Lithuania argue that various benefits, which alleviate the burden on business and encourage investment where it is most needed, are already in place.
“The income tax rate could be reduced to 13-15%, sending all income tax to local governments and reducing labor taxes” suggested the Minister of Finance Keit Pentus-Rosimannus (Reform) on Monday. Writing on social media, the minister said this move would help local governments to finance maintenance and care costs. She also wrote that Estonian labor taxes are too high while health care and social care costs need to be better funded in an aging society.
“Digital services of the European Union member states must be made available to all citizens of the EU” says the Minister of Entrepreneurship and IT Andres Sutt (Reform). Sutt made his comments at a time when the Union has rolled out a timetable for greater and more integrated pan-EU digital services, including digital wallets.
The Ministry of Economic Affairs and Communications for Estonia, wants to analyze the existing use of e-receipts and to propose a new service to be introduced by 2025. “Although e-receipt has been available as a service in Estonia for a long time, it is still used relatively little. Larger stores offer the possibility of a digital receipt already now, but more often it’s still paperwork that we can see today. (…)” said Andres Sutt, the Estonian minister.
Lithuania ranks sixth in the Global Tax Competitiveness Index but it has the least attractive corporate tax regime in the Baltic region. It taxes retained and reinvested profits and applies a personal income tax when dividends are paid out. The effective combined tax rate stands at 27.7%. Estonia and Latvia tax only redistributed profits, at 20%.
After thirty years of independence, today Estonia has a very high government integrity, full respect and guarantee of property rights, a fair tax burden and government spending, high trade investment, and considerable financial freedom. Not bad for a country that has been under State Socialism for almost half a century.
Ever since the first lockdown in 2020, the world has been going through some radical changes. Social distancing became a rule. Everyday life, in general, has changed and people focused on the prevention of the spread of the virus.
The Lithuanian government has enlisted Lithuanian Free Market Institute’s (LFMI) proposal for adopting the Estonian corporate income tax model among Lithuania’s main tax reform alternatives.
After the resignation of Jüri Ratas (Estonian Center Party) on January 13th, due to an inquiry entailing alleged corruption charges against his party, Kaja Kallas, the center-right Reform Party’s leader, has become the first female Estonian Prime Minister.