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Income tax changes

From 1 July 2021, the concept of low tax territory (i.e. tax haven) in the income tax legislation is replaced with EU list of non-cooperative jurisdictions for tax purposes, the aim of which is to prevent tax avoidance and tax evasion, as well as to improve transparency and good international tax governance all over the world. Thus, the current article of the low tax territory will be abolished in the law and that term will be replaced with non-cooperative jurisdiction for tax purposes throughout the law.

The respective EU “black-list” adopted by the Council on 22 February 2021 include the following jurisdictions: American Samoa, Anguilla, Dominica, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, Vanuatu. The described list is updated by the Council twice a year – in February and in October (see also https://www.consilium.europa.eu/et/policies/eu-list-of-non-cooperative-jurisdictions/).

In addition, from 1 January 2022 the rights for applying the tax-exempt basic allowance on a monthly basis will be extended to individuals who are tax residents of other EU or EEA countries. Until now, such individual is entitled to make allowed deductions of tax-exempt basic allowance only through the annual individual tax return in Estonia. Also, the conditions of income tax legislation prescribing the cases when the individual is not required to submit annual tax return will be made equal to both Estonian residents and individuals who are tax residents of other EU or EEA countries (e.g. when the annual taxable income of the individual does not exceed the tax-exempt basic allowance etc.).

We offer tax advice as a separate service as well as part of our accounting service.

Call +372 686 7110 or e-mail numeri@numeri.ee us for information today!