Amendments to Estonian Tax Laws and Vote of Confidence in Government: Updates from Government Meeting and Parliament

On Monday, at the government meeting, it was decided to send the amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Tax Law, the Gambling Tax Law, the Value Added Tax Law, as well as the Income Tax Law and the Military Service Law back to the parliament for consideration.

The parliamentary opposition submitted more than 1,000 motions related to these bills, so the government decided to link the vote on them with a vote of confidence in the government, thus avoiding a long debate on the opposition’s motions and obstruction of the work of the parliament.

The vote of Rīga councils, which is also a vote of confidence in the government, is expected on Wednesday.

The draft law provides that from January 1, 2024, the VAT rate in Estonia will be increased from the current 20% to 22%. From 2025, VAT on guest accommodation services will be raised from the current 9% to 13%, which is lower than originally proposed. On the other hand, the VAT rate for press expenses will be raised from the current 5% to 9%.

The excise tax on alcohol, as well as cigarettes and smoking tobacco will be increased by 5% per year for three years from 2024. The planned increase in the excise tax for diesel fuel intended for specific purposes has been cancelled, thus maintaining the rate for this type of fuel in the European Union at the minimum allowed level of 21 euros per 1000 liters.

The tax rate for table gambling will increase from EUR 1,278.23 to EUR 1,406. The tax on slot machines will be rounded from 31.95 euros to 32 euros, while the tax on lotteries and commercial lotteries will increase from 18% to 22%. The tax rate for remote gambling will be increased from the current 5% to 6% next year and will rise to 7% from January 1, 2026.

Next year, it is planned to abolish additional tax benefits for children and spouses, as well as the possibility to include mortgage loan interest payments in tax-free income. From 2025, it is planned to raise both the personal and corporate income tax rates from 20% to 22%.

The bill is intended to abolish the reduced tax rate of 14% for distributed profits of companies, as well as the 7% income tax rate for dividends paid to private individuals.

From 2025, it is planned to introduce a single non-taxable minimum rate of 700 euros per month or 8400 euros per year in Estonia. The exception will be applied to persons of retirement age, whose tax-free minimum will be in the amount of the average old-age pension.

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