Many studies and opinion polls outline that entrepreneurs and potential investors have been concerned for years that high labor taxes severely limit the competitiveness of Estonia.
Labor taxes cause problems regardless of the field of activity in Estonia. In sectors where the added value is higher (especially in the service sector) the specifics of Estonian social tax system has limited the recruitment of high-salaried specialist from abroad to Estonia for development purposes. High labor taxes also affect the wage cost competitiveness in low value-added sectors as the deferred taxation on reinvested profits does not provide a substantial relief to the employer. The net wages of lower-paid employees are under pressure due to the low tax free threshold.
In addition to the Labor taxation, AmCham members have expressed their concerns regarding the following taxation issues:
- Employment taxation/Social Taxes/Sick Leave Compensation & Burden
- Discriminatory Taxation (obesity tax, soft drink tax, taxation on one-way packaging, etc.)
- Stock Award Program with fringe benefit tax for employer
- Absence of R&D Credits/Incentives
- Necessity to Cap Social Tax
- Taxation of Capital Gains
All the above issues undermine Estonia’s competitives in the region and its attractiveness for FDI. Also, these issues are of great importance to AmCham members in various sectors and significantly affect their operations in the country.
AmCham White Paper on Taxation as a Pillar of Estonian National Competitiveness in the Region:
(released on December 14, 2012)
The idea of the AmCham Taxation Committee is to engage with all taxation issues that relate to the needs of FDI in the country and Estonia’s competitiveness in the region, which would allow the views of members to directly feed in to key policy makers.
- Elvira Tulvik, KPMG Advokaadibüroo – Chairperson
- Rain Laane, Microsoft Estonia
- Ranno Tingas. Ernst & Young Estonia
- Joel Zernask, KPMG
- Nele Normak, Coca-Cola Hellenic
- Kristjan Järv,Grant Thornton Rimess
- Maris Leemets, Philip Morris International
- Daria Sivovol, AmCham