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Minister Pentus-Rosimannus: Let’s await the outcome of the OECD tax reform

7. December 2021 - 18:21

Estonia prefers to await the outcome of the OECD-led global tax reform before embarking on amending the Code of Conduct on Business Taxation, said the Minister of Finance Keit Pentus-Rosimannus, attending the ECOFIN meeting that took place in Brussels today.

„The global tax reform may have an unpredictable impact on the tax systems and investment strategies, both within the EU and outside,“ stated the Minister. „We should monitor the results of its implementation before taking any major new steps.“

„Estonian corporate income tax system is simple and efficient. It encourages innovation, growth, and job creation. It is in Estonia’s interest to keep it as such. Any new tax rules would have to be carefully targeted to avoid undue burden on business,“ the Minister explained.

According to the Minister, the OECD minimum tax agreement has taken the Estonian tax system into consideration. Nevertheless, it is important to ensure that the European Union proposal will not extend the tax beyond what’s already agreed.

The European Commission is expected to publish the proposal for the minimum tax directive on December 22. No new details have been announced about the second half of the OECD Statement, the so called digital tax.

„It is crucial for the tax on digitalized economy to progress as speedily as the minimum tax. The two pillars form equal parts of the OECD tax deal. Without one, the whole construction will collapse,“ the Minister announced.

The EU finance ministers gathered in Brussels on Tuesday to discuss the amendments to the Code of Conduct on Business Taxation. The Code, dating back to 1997, embodies a political commitment by the EU member states to curb tax measures that constitute harmful tax competition.

A member state seeking to introduce a tax incentive that departs from its general tax rules is required to inform the Code of Conduct Group, which will then assess the tax measure as harmful or not.

The debate on amendments to the Code has been carrying on for the last few years but was recently stopped to prioritize the OECD reform. This Tuesday, the issue under discussion was extending the scope of the Code to the general features of a tax system that may give rise to a tax exemption or double non-taxation.