Right decisions of Latvia overthrew Estonia from its leading position

News Back

Even if Estonia established the same so-called wonder tax as Latvia, we would never outdistance Latvia, but would just become equal with our neighbors, said Priit Raudsepp, the head of tax area in Glikman Alvin. Yesterday, Latvia passed an amendment by which the micro companies whose turnover is 7000-100 000 euros, shall pay only 9% VAT during the first three years and during the fourth year, the tax rate shall increase to 12%. These companies must not pay social, income and unemployment insurance taxes, as well.

Priit Raudsepp, the head of tax area in law office Glikman Alvin said that Latvia works hard, looks for opportunities and makes them happen. “What Latvia does, is great,” he said. In addition to the amendment of VAT incentive of starting micro companies, the attitude of Latvia is illustrated by the fact, according to Raudsepp, that the exemption of selling shares of foreign subsidiaries was established there. The new coalition agreement in Estonia has in it that Estonia considers the same change, but even after carrying it out, Estonia would not get the advantage in front of Latvia, but would just become equal with its neighbor, said Raudsepp.

Raudsepp said that Latvians set their minds to something and act upon it. “When before Estonia was considered to be the pioneer in the Baltic States, then now it has been told for a while that our tax environment is getting clearly behind from the one of Latvia,” he said. Raudsepp thinks that the positive tax changes in Latvia influence the decisions of foreign investors, who see Baltic States as whole, the most. “As Estonian lawyer, it is difficult to say, considering all aspects, that the tax environment here is the best, “ he noted. If the foreign investor finds that it is more reasonable to set the head office in Latvia, all the money that could have come to Estonia, goes there, according to Raudsepp.

Raudsepp says that Estonia should follow Latvia’s example and analyze what are the important things in tax law to be implemented quickly. “Little detail changes, like the reduction of social tax by one per cent, are not enough. The style of coalition agreement “let’s see, consider and analyze, is it worth at all to make any changes” is not very useful”, said Raudsepp. He says that topics to be dealt with are many. “Maybe a commission should be called to brainstorm ideas, because it can be seen now that politicians are lacking ideas and to be honest, no one seems to be concerned about it, as well,” he said.

He added that new and principle innovations must be searched for – placing the eggs from one box to another is not useful in any way. Raudsepp stressed establishing the social tax ceiling which was agreed upon in the coalition agreement from 4 years ago, but has not been in the two last agreements.

Article was written by Eliisa Matsalu and it was published in Äripäev on 24.04.2015.

Related news
News

Tax catch: is it service or employment?

18.05.2015
Priit Raudsepp
Priit Raudsepp, the attorney-at-law of Law Office GLIKMAN ALVIN introduces in legal blog of thematic web of Äripäev, raamatupidaja.ee the newest decision of Supreme Court en banc, which is pioneering in several ways. Namely, the Supreme Court treated thoroughly the approach to tax claim in bankruptcy proceeding, as well as tax thematic of labor tax evasion by PLC.
News

E-journal: tax law (September 2015)

01.09.2015
Priit Raudsepp
This GLIKMAN ALVIN’s e-journal of tax law introduces the following and relevant thematic news.
News

E-Journal: tax law (December 2014)

16.12.2014
Priit Raudsepp

This GLIKMAN ALVIN’s e-journal of tax law introduces the following and relevant thematic news:

News

Äripäev: Low-paidmanagers earn thousands

30.11.2016
Priit Raudsepp

On Äripäev’s request, Priit Raudsepp commented the subject which can be summarized by some as “Labor tax evasion by PLC vol 2”.

News

New weapons of Tax Board

06.09.2016
Priit Raudsepp

“New Weapons of Tax Board”. This is the largest headline on the cover of today’s Äripäev. Attorney-at-law Priit Raudsepp has explained the background of amendments entering into force in November.

News

University of Tartu law students visited our bureau.

20.02.2017
Ain Alvin , Priit Raudsepp
University of Tartu law students visited our bureau. 
News

Uber case as an exemplary process

16.05.2017
Priit Raudsepp
According to managing partner Priit Raudsepp and lawyer Mari Anne Leškina qualification of Uber as a transport company might become fatal for another similar applications.
News

Dramatic changes to CIT system would affect economy

18.05.2017
Priit Raudsepp

Priit Raudsepp along with other tax specialists calls not to undermine Estonian CIT system.

News

We have been shortlisted for the European Tax Award and recognized as a top-tier firm by The Legal 500

19.05.2017
Leon Glikman , Ain Alvin
We are delighted to share with you our new International recognitions gained by law firm GLIKMAN ALVIN, assuring once again our clients, that we are professional, reliable and effective partners. Client satisfaction is our measure of success for the work we do. But we also value the external recognition gained through the awards we have won around the world.
News

Shareholders stand to lose money on dividends

27.06.2019
Priit Raudsepp
As an effect of the corporate income tax change introduced by the Estonian government effective 1 January 2018, shareholders may lose an undue amount of money because of an easy-to-make mistake in how tax on dividends is calculated.

Join the newsletter