Ministry of Finance tax policy adviser Erle Kõomets said the U.S, EU and other EU member states are applying pressure so Estonia would change its mind on the agreement and join the program at a 15 percent minimum tax rate.
The amendment would affect some 200-300 international companies with subsidiaries in Estonia. "It is very important for the U.S. that this contract would work and do so as widely as possible, because they are going through several internal tax changes. They want to raise taxes and wrap up any options of avoiding taxes. And if all countries, or at least as many as possible, would now join the project, it would make things much more simple for them," Kõomets said.
The companies in question are released from income tax on the basis of re-invested earnings. On Monday, Prime Minister Kaja Kallas (Reform) talked economic cooperation with U.S. national security advisor Jake Sullivan. Kallas said Estonia's tax system could remain unchanged.
"The advantage of our system is that our tax system is simple and transparent. And we do actually collect corporate tax, we are not a tax haven, everyone understands that, but we have other rules. And we are discussing how we can maintain this system," the prime minister said. "We will go and discuss this to find a compromise suitable for everyone."
Currently, there is zero corporate income tax on retained and reinvested profits in Estonia and a 14-20 percent tax on distributed profits.
Nine other countries, including Hungary and Ireland, do not back the OECD's global minimum corporate tax agreement which would see a 15 percent tax rate set. A final agreement is expected to be reached in October, when the G20 countries convene.
