Estonian Tax Burden Lower Than EU Average in 2010
Eestlased Eestis 25 May 2012  EWR
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Estonian Review
On the basis of the data annually released by Eurostat and the European Commission, the Estonian tax burden contracted 1.5 percentage points to 34.2% of the gross domestic product (GDP) in 2010, considerably below the EU average.

The average weighted tax burden of EU member countries was 38.4% of GDP. Compared with 2009 the tax burden has remained at the same level.

The Finance Ministry said that the Estonian tax burden contracted in 2010 due to nominal GDP growth and simultaneous tax inflow, which refers to a big share of export in the economic growth. Contraction of tax revenue in GDP was influenced in 2010 compared with the previous year of legal entities tax inflow from state and private companies profit allocations and collection of tobacco excise and the social tax due to negative development of the labor market.

The share of direct taxes was one of the lowest among EU member countries, respectively 19.9% and 24th place. One of the reasons for this is peculiarities of legal entities’ income tax compared with others, as a result of which the share of legal entities’ income tax in Estonia was four percent of all the taxes and as a result Estonia is in the 24th position in the European Union.

The share of social insurance taxes and indirect taxes is higher than the EU average in Estonia, respectively 38.5% and seventh place and 41.7% and 10th place.

The Estonian tax burden was close to 32% until 2008, but grew in 2009. Starting from 2010 the Estonian tax burden has started to fall and will arrive at 32% of GDP by the year 2016.
 
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