Draft law amending the Value Added Tax Act and the Tax Procedure Act (462 SE) - First Reading
Session: 15th Riigikogu, 4th sitting, plenary sitting
Date: 2024-09-24 13:20
Participating Politicians:
Total Speeches: 28
Membership: 15
Agenda Duration: 19m
AI Summaries: 28/28 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
Bill 462 – First reading of the amendments to the Value Added Tax Act and the Tax Procedure Act. The main agenda item aims to simplify the operation of small businesses in other European Union member states in accordance with EU directives coming into force at the beginning of 2025. Significant changes include the creation of a special arrangement with restrictions for small businesses, allowing them not to register as a VAT payer in another country on a turnover of €100,000, provided that their turnover in Estonia does not exceed certain limits during the calendar year. In addition, the tax administrator's supervision of those using the special arrangement is clarified, the nature of taxation on buildings is amended (taxation for the first time in the year of first use), and the procedure for adjusting input VAT on fixed assets is changed to reduce the risk of incorrect deductions. Furthermore, the introduction of a data-based VAT return (transition to a form) is planned from 2026 onwards to simplify and modernize the tax obligation. Several questions were raised and the commission confirmed that the procedure will be directed to the entire assembly and the first reading will be completed according to plan, with deadlines set for submitting amendments.
Decisions Made 4
The proposal's inclusion on the plenary session's agenda for September 25th and the suggestion to conclude the first reading.
A proposal to continue cooperation according to the planned procedure, following the completion of the first reading.
A representative for the Steering Committee shall be appointed as the rapporteur for the meeting, with the representative of the relevant committee; furthermore, the deadline for submitting amendments is set at ten working days.
The deadline for submitting amendments is set at ten working days; the exact date and schedule will be specified in accordance with the plenary session protocol.
Most Active Speaker
Among the most active speakers were VrDPwHs2xBs, vw5WQVoukVA, and UgFd274QJi4 (two interventions each), which demonstrates strong verbal articulation and ample room for discussion. Positionally, their involvement may be categorized as "other" (given the political character and role of these individuals in the plenary context, the official, surface-level party affiliation highlighted for all of them is not clearly defined in this context).
Aseesimees Toomas Kivimägi
AI Summary
The Riigikogu moves on to the second item and begins the first reading of Bill 462, the draft Act on Amendments to the Value Added Tax Act and the Taxation Procedure Act, initiated by the Government of the Republic, inviting Minister of Finance Jürgen Ligi to give the presentation.
Rahandusminister Jürgen Ligi
AI Summary
The report confirms that the EU directive, which enters into force on January 1, 2025, simplifies the VAT obligations for small entrepreneurs in other countries, allowing them to avoid registering as VAT payers if their turnover in that country during the calendar year does not exceed the local threshold, and their total EU-wide turnover remains below 100,000 euros. This establishes a special regime for small entrepreneurs, increases the supervision of the tax authority, and introduces changes to the taxation of buildings, the procedure for adjusting input VAT, and the submission of VAT declarations, which will transition to a data-based system starting in 2026.
Aseesimees Toomas Kivimägi
AI Summary
Thank you! It is time for questions, and Rain Epler is invited to come forward to answer the questions.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
It discusses the amendments to the Value Added Tax Act concerning the conditions for the tax exemption of immovable property, where the provision “initial commissioning or for the first time within one year thereafter” is added, and inquires about the purpose and background of this amendment.
Rahandusminister Jürgen Ligi
AI Summary
The primary reason is the prevention of tax evasion concerning the structure; under the new regulation, the structure is taxed upon its first sale within the first calendar year, which statistically covers the majority of tax fraud cases.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Korobeinik asks how the deduction of input VAT, which has been extended to ten years, applies to those who are not eligible for it, and how they have managed to do it until now.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Speaker Toomas Kivimägi invites Andrei Korobeinik to speak.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi confirmed that the procedure for calculating input VAT will not change and that no instructions regarding tax fraud will be issued. However, during the first year, attempts will be made to commit these frauds by ostensibly using buildings to avoid taxation.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invited Rain Epler to speak.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler follows up on the previous question, asking the Minister whether the changes planned to reduce tax fraud have a statistical basis and whether they might leave a negative impression on businesses. He further emphasizes that the bill's objective was to help small entrepreneurs facilitate transactions within the Union, but questions why significant changes to input VAT deduction were not mentioned.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that although the questions sounded hostile and he had not come there to listen to insults, honest tax compliance from businesses is necessary and ensures fairer competition.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invites Andrei Korobeinik to speak.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Andrei Korobeinik stated that the rules for deducting input VAT are actually changing — a tenth can be deducted annually over a period of ten years — and he asked for the reason behind the change, noting that this provision is already included in the draft bill.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that the question was grammatically awkward and that there were no general changes, but the actual modification concerns the change in the deduction based on the building's actual use, and these are two separate points that have been conflated.
Aseesimees Toomas Kivimägi
AI Summary
The beginning of the address is simply a request for Arvo Aller to come.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller inquired why the VAT liability threshold is not being raised and why the Estonian registration threshold was not adjusted, especially considering it stands at 40,000 euros in Estonia (compared to 100,000 in the EU). He added that, in his opinion, it would have been simpler to proceed with the previous proposal for amending this threshold.
Rahandusminister Jürgen Ligi
AI Summary
The state seeks to collect tax revenue and ensure the equal treatment of businesses, and it aims to reduce the complexity between tax obligations and non-tax obligations.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invited Aivar Kokk to speak.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk asks whether the turnover threshold of up to 100,000 valid in a neighboring country triggers VAT liability, and whether using the same scheme across all 27 European Union countries, one could generate a million in turnover without paying VAT.
Rahandusminister Jürgen Ligi
AI Summary
Jürgen Ligi explained at length in the committee that the relief is subject to an intra-Community total turnover limit of 100,000 euros, not 100,000 euros per country, and that there is a separate upper limit for VAT liability in each country, which is the second condition for its application.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi thanked the minister, announced that there were no further questions for the minister, and asked Rain Epler to present his question to the presiding officer.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler raised an objection, noting that the Chairman of the Riigikogu session should maintain order, and criticized the minister, who responded offensively and attacked the grammar of the question, emphasizing that the minister’s duty is to answer questions, not to attack MPs.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi stated that the chairman of the session does not intervene in the substance or the responses, nor will he subjectively over-evaluate anyone's position, but intervention is expected in the event of impolite expressions. He then invited Mart Võrklaev, a member of the Finance Committee, to the Riigikogu podium to give a presentation on behalf of the leading committee, as the Yellow Book states.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
On September 9th, the Finance Committee discussed a draft bill amending the VAT on real estate. Starting January 1, 2026, both new constructions and the transfer of real estate occurring prior to its commissioning will be subject to taxation. This measure aims to eliminate schemes where placing a property into use before sale allows it to bypass VAT liability. Additionally, thresholds were clarified (EUR 100,000 in the EU; EUR 40,000 in Estonia), along with nuances regarding the taxation of e-shops and small enterprises. It was decided to place the draft bill on the plenary session agenda for September 25th and conclude the first reading.
Aseesimees Toomas Kivimägi
AI Summary
The address conveys deep gratitude and invites Arvo Aller to take the floor.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller notes that the discussion centered on fixed assets and real estate, and asks whether the committee also deliberated the specific characteristics of land purchase, and whether buying agricultural land creates specific exceptions regarding turnover and VAT, or if this only concerns real estate.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The draft bill concerns only real estate and regulates whether VAT is included in the price when a building is sold; it does not apply to land.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi announced that the first reading of Draft Bill 462 has been concluded, the deadline for submitting amendments is 17:15 on October 8th of the current year, and the consideration of the second agenda item has also been concluded.