Estonia, on 2 May, 2024, unveiled a new Act in their official gazette. The Act supplements existing tax legislation, including the Tax Information Exchange Act, the Taxation Act, and the Income Tax Act, to align with European Union directives.
Public CbC Reporting
One significant aspect of the amendments is the incorporation of public Country-by-Country (CbC) reporting requirements. Rather than introducing entirely new reporting mechanisms, the Act empowers the tax authority to publish requisite information on its website.
This move, effective for financial years starting on or after 22 July, 2024, streamlines the process while ensuring compliance with EU standards.
Pillar 2 Global Minimum Tax
Estonia has chosen to postpone enforcing the core aspects of the Pillar Two Global Minimum Tax plan (Council Directive (EU) 2022/2523), meaning that the Income Inclusion Rule (IIR) and the Undertaxed Payment/Profit Rule (UTPR) won’t be applied for now.
Partial Pillar 2 Implementation
While delaying core aspects, Estonia has adopted certain related measures. These include establishing rules for identifying the location of a company’s group entities and setting minimum tax return filing requirements.
These regulatory changes reflect Estonia’s commitment to adapting its tax framework in accordance with evolving EU directives, fostering transparency and international cooperation regarding taxation.
