“We have not considered this initiative suitable for Estonia from the very beginning, and even less so now, when the United States, who initiated this effort, has declined to implement it themselves. It would not bring revenue to the budget, but it would bring substantial bureaucratic costs. I told my U.S. colleague when asked that we do not want anything other than what they want for themselves,” said Minister of Finance Jürgen Ligi.
The minimum tax framework proposed by the OECD is technically too complex and would create a disproportionate administrative burden for both businesses and the tax authority. This burden would be particularly heavy in countries where few multinational headquarters are located.
Analyses also do not indicate that the minimum tax would bring Estonia sufficient revenue to justify the costs of its implementation.
The Estonian government has set the simplification of the business environment as a priority. The proposed solutions, however, move in the opposite direction and do not support the principles of Estonia’s simple and efficient tax system. Therefore, Estonia cannot approve these rules as long as there is an obligation to incorporate them into its legislation.
Countries must be guaranteed the option to decide whether and when to implement the minimum tax. Sufficient preparation time must also be ensured, given that the minimum tax rules are still evolving and require further clarification. Although substantial progress has been made in the negotiations, we have not yet reached a solution that would satisfy Estonia’s main concerns.
At present, Estonia has a derogation in the EU minimum tax directive that allows postponing the implementation of the minimum tax until 2030. Estonia is seeking to extend this derogation. Estonian Minister of Finance also sent a public letter to the Commission last week highlighting the same concerns.
