On October 27, 2023, Estonia published a draft legislation to incorporate OECD Pillar 2 rules into its domestic law, aligning with the EU Minimum Tax Directive. The draft does not incorporate provisions regarding income inclusion rule (IIR) and undertaxed payments rule (UTPR), and there is currently no indication of the government’s intended timeline for implementing these rules either by or before 31 December 2029.
Estonia plans to implement only the administrative aspects of the EU Directive, rather than transposing the entire directive at this point. The draft specifically mandates Estonian Ultimate Parent Entities (UPEs) to designate a foreign constituent entity responsible for submitting the Global Anti-Base Erosion (GloBE) Information Return. Furthermore, it remains unclear whether the government intends to implement the qualified domestic minimum top-up tax (QDMTT).
