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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case EE-2020-10/341 Updated – measures in Estonia

Interests on tax arrears suspended/reduced

Maksuvõlgade intressi arvestamise peatamine/vähendamine

Country Estonia , applies nationwide
Time period Temporary, 01 March 2020 – 31 December 2021
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Deferral of payments or liabilities
Author Ingel Kadarik (Praxis Center for Policy Studies) and Eurofound
Case created 07 April 2020 (updated 14 July 2020)

Background information

Due to reduced income of companies, there are difficulties foreseen in relation to paying taxes by the companies. Collecting interest on these tax arrears further worsens the situation of the companies. Therefore, the government decided that while tax obligation remains in place, there are other ways to reduce the burden of the companies. For suspending the interests on tax arrears, a government decree was changed and relevant subsection was added.

Content of measure

The Estonian Tax and Customs Board suspended the calculation of interests on tax arrears of companies from 1 March 2020 until the end of the emergency situation (currently 17 May 2020). After the end of the emergency situation, the interest rate is reduced from 0.06% to 0.03% per day until the end of 2021.

Also, companies with deferred taxes or deferred tax debt can have interest rate reduced by up to 100% from 1 May 2020 to 31 December 2021. Usually, the interest rate can be reduced up to 50%.

Additionally, no tax arrears are published in public business registries as usual.

Updates

The following updates to this measure have been made after it came into effect.

10 July 2020

As of 25 May 2020, tax arrears are again published in public business registries.

Use of measure

According to Tax and Customs Board, by 25 May 2020, more than 10,000 companies had incurred a tax debt more than €50 during the emergency situation. The total amount of the tax debt was €128 million. 4,000 companies had deferred their tax debt.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Company / Companies
Other social actors (e.g. NGOs)
No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement as case not in social partner domain No involvement as case not in social partner domain
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Unknown

Involvement

n.a.

Views and reactions

No information to add.

Sources

  • 18 March 2020: How the state and Tax Board help companies in trouble (Kuidas riik ja MTA aitavad raskustesse sattunud ettevõtjaid) (www.emta.ee)
  • 23 March 2020: Government decree (Valitsuse määrus) (www.riigiteataja.ee)
  • 25 May 2020: Tax Board published debts again (MTA avas tänasest avaliku võlapäringu) (www.emta.ee)

Citation

Eurofound (2020), Interests on tax arrears suspended/reduced, case EE-2020-10/341 (measures in Estonia), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.