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Estonia - TAXES ACCOUNTING |
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Corporate tax
Tax rate for resident companies |
Companies are not taxed on their profits but pay a distribution tax on distributed profits, amounting to 24/76 of the net dividend (ie 24% of the gross distribution). Undistributed profits are therefore not subject to taxation. The distribution tax applies to resident companies and to permanent establishments of foreign companies. Certain income of non-resident companies is taxed by withholding. A company is considered to be resident in Estonia if it is founded under Estonian law. The distribution tax is to be reduced from 24% of the gross distribution in 2005 to 22% in 2006 and 20% in 2007.
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Taxe rate on long-term capital gains |
Resident companies in Estonia as well as permanent establishments of foreign companies registered with the Estonian authorities are not subject to tax on their capital gains.
Non resident companies not having a permanent establishment are subject to the capital gains tax at the rate of 24% on their capital gains derived from Estonia.
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System governing groups of companies and dividends paid by subsidiaries to their parent companies |
A 24% withholding tax is imposed in dividends paid to nonresidents that hold less than 25% of the share capital of the payer.
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Tax rate on branches |
Permanent establishments of foreign companies registered with the Estonian authorities are not subject to tax on their income, with the exception of the payments made to non resident entities which are subject to the corporate income tax at the rate of 26/74.
Non resident companies not having a permanent establishment are subject to the corporate income tax at the rate of 24% on their incomes derived from Estonia.
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Income tax
Fiscal year |
The fiscal year begins on January 1st and ends on December 31st of the next year.
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Income tax rate |
Individual income tax is charged at a flat rate of 24%, which is to be reduced to 22% in 2006 and 20% in 2007.
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Tax deductions or
other allowances |
Tax deductions in Estonia:
A fixed deduction of 6 000 EEK a person.
The interests of loans paid for the purchase of a place of residence are deductible.
Les living allowances are deductible.
School fees (limited deduction).
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VAT rates
Standard rates |
The base rate is 18%.
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Reduced rates |
Reduced rates vary are 0% (exports) and 5%.
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Other important taxes
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Name of tax |
Rate |
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Rights of recording
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0.40%
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Municipal tax
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1 to 2%
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Accounting
Introduction
All Baltic States inclusive Estonia have the same accounting system.
General accounting principles
The main financial documentts in Estonia are the balance sheet, the profit and loss account and the cash flow statement.
- Concerning the cash flow statement, it is necessary to take into account flows resulting from operations of investments, financial flowss, liquid assets at the beginning and at the end of the accounting year and flows of any other activity.
- Each asset, liability, debt, authorized capital, liquid asset or financial results must be discosed.
-The estonian accounting practices are recognized internationally.
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Obligations and publications
The publication is rarely used in Estonia.
But since 1997, some accounts of companies are disclosed to the public.
Certification and auditing
The control of accounts is made by audits, but drafting an audit report is not necessary.
Professionals and representative organizations
- The Ministry of Finance.
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Last modified in
January 2003
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