On 8 February 2024, Estonia’s Ministry of Finance, in a release announced that it passed the draft legislation to postpone the implementation of the Pillar 2 global minimum tax until the year 2030. Until that time, the companies that fall within the scope of the tax will be subject to the obligation to provide information.

From 2024, the minimum income tax for large groups with an annual turnover of more than 750 million euros entered into force in the EU and several third countries. Countries with fewer than 12 ultimate parent companies of large groups can benefit from an exemption, according to which the minimum tax does not have to be applied for the first six years.

The release also highlights that the legislation includes provisions for enforcing tax information disclosure requirements for large organizations, specifically public Country-by-Country (CbC) reporting.

The main requirement of the Minimum Tax Directive is that the effective tax rate for large groups must be at least 15% in every country where they operate. The Estonian exception does not exempt companies belonging to one group from the minimum tax obligation arising in other countries. However, it reduces the administrative burden of both companies and the Tax Board in Estonia.

If Estonian companies become subject to the minimum tax obligation in other countries, another exception has been added to the minimum tax rules at the request of Estonia, which allows the minimum tax obligation to be postponed for four years. This exception makes it possible to maintain the attractiveness of the Estonian corporate income tax system to some extent.

According to the draft legislation, the Estonian headquarters of large groups will have to designate a specific subsidiary located in another country, which will submit the minimum tax declaration on behalf of the group. All other entities of the group will also have to provide this subsidiary with the information necessary to fill out the declaration.

The deadline for submission of the minimum tax declaration is 30 June 2026, so entities located in Estonia will have to fulfil the obligation to provide information for the first time in 2026.

In addition, the law implements amendments made to the EU Accounting Directive into Estonian law. It imposes on large groups of certain types the obligation to disclose income tax information. This change concerns multinational groups operating in Europe, the total revenue of which in two consecutive accounting years exceeds 750 million euros.

In Estonia such data is already being submitted by the relevant companies to the Tax and Customs Board. When the law enters into force, the Tax Board will start to publish this data on its website, and companies will not have an additional reporting burden.