Draft law amending the Simplified Taxation Act for Entrepreneurial Income and amending other acts in consequence (463 SE) – first reading
Session: 15th Riigikogu, 4th sitting, plenary sitting
Date: 2024-09-24 13:40
Participating Politicians:
Total Speeches: 17
Membership: 15
Agenda Duration: 14m
AI Summaries: 17/17 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
Under item three, the draft bill amending the simplified taxation law for entrepreneurial income initiated by the Republic’s Government, and the related amendments to laws 463, was discussed. The draft focuses on restructuring the tax system through three main phases: first, simplifying and replacing the taxation of a natural person using an entrepreneurial account to provide services to a business entity with a partial income tax burden of social tax; second, updating the limits and rates of taxation to ensure the proportionality of the limits and their impact on new circumstances, including the value-added tax limit; third, an overview of the rules for sharing taxes and changes in Pillar II, which provides individuals with a choice regarding contributions to occupational pension schemes and sets the amended tax rates depending on the chosen occupational pension contributions. The draft's entry into force is planned for January 1, 2025, which creates new obligations and rights for employers and entrepreneurs in the near future.
Decisions Made 1
First reading completed; deadline for submitting amendments is October 8th at 5:15 PM; consideration of agenda item number three concluded.
Most Active Speaker
The most active speaker at the session was Aivar Kokk (Isamaa, right wing). He posed several clarifying questions regarding the implementation of the bill's tax rates, pointing out that precise calculations and explanations are needed, as well as why and whom this change will affect the most. His presentations and questions demonstrated a pragmatic and controlling approach to tax changes, indicating a political position leaning towards the right.
Aseesimees Toomas Kivimägi
AI Summary
The speech focuses on the third item—Bill 463, which provides for amendments to the Law on Simplified Taxation of Business Income and other laws.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi emphasizes Rain Epler's inappropriate conduct and explains the three main changes in the draft bill: first, the taxation of a natural person who uses an enterprise account to provide services to a commercial undertaking will shift from 50% of the service fee to social tax; second, tax thresholds and tax rates will be modified; and third, obligations related to the Second Pillar will change—the funded pension will become voluntary, and the tax rate will depend on the chosen funded pension scheme—and these amendments will enter into force on January 1, 2025.
Aseesimees Toomas Kivimägi
AI Summary
The Deputy Speaker thanks the Minister and calls upon Arvo Aller to ask at least one question.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller requests clarification regarding the tax rates and notes that the higher tax rate, namely 40%, will be abolished, and the tax rate will remain 20% regardless of the sums deposited into the enterprise account.
Rahandusminister Jürgen Ligi
AI Summary
Minister of Finance Jürgen Ligi answered in the affirmative.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invited Aivar Kokk to speak.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
He asks the committee who commissioned the draft bill, referencing the Ministry of Finance's figures, and notes that fewer than 200 people will be using the business account next year. This creates a budget deficit of 220,000 euros. He then questions why this logic equates the situation with the private limited company's 40,000 euros, reminding everyone that the business account was originally created for people's health insurance and social tax contributions. He concludes that the current proposal is incomprehensible and that there are very few users.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that the tax rate for contributions made to the second pillar is between 22 and 26 percent, and 20 percent without contributions. He stressed that the system was initiated by the finance minister from the Isamaa party and must remain sensible for small entrepreneurs, given that the deduction of costs for limited liability companies is crucial. If these costs cannot be deducted, business profitability becomes restricted.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi invites Andrei Korobeinik to take the floor.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Andrei Korobeinik asks how taxes are applied in a real-life situation—is the business income tax 20%, or is half of the social tax (16.5%) added on top of that, for example, if a person earns 30,000 euros.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi explains that this is not an added burden; rather, the 20% income tax rate is being replaced by a social tax liability, which will be applied at a 50% rate. In fact, the overall tax rate decreases, and the entrepreneur gains social guarantees in addition.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invites Aivar Kokk to speak.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk requests clarification from the Minister concerning two tables: Table 2 indicates 8,540 people joining the enterprise account scheme next year, while Table 3 shows only 196 individuals. Furthermore, by 2028, this results in a negative impact of 4.7 million euros on the state's budgetary position. He asks who these plans are being made for and how this deficit can be reduced, while simultaneously discussing Isamaa's proposed 25,000 euro limit and the issue of competition faced by enterprise account holders.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi said that the thresholds have become outdated, and adjusting them could slightly boost entrepreneurship and adapt the situation, although 160 referred to the group of higher-rate taxpayers, and the number of taxpayers is larger for those with a turnover up to 25,000, and such changes can sometimes be costly.
Aseesimees Toomas Kivimägi
AI Summary
The speech concluded with thanks to the Minister, and former Minister of Finance Mart Võrklaev was invited back to the Riigikogu podium to present the leading committee's report and introduce its decisions.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Riigikogu Finance Committee discussed the draft bill concerning the taxation of the enterprise account and its impact compared to the VAT and social tax burden faced by a private limited company (OÜ). Aivar Kokk subsequently raised the issue of inequality related to the 40,000 euro threshold. Kairi Ani clarified that the enterprise account operates under a different tax structure, and calculations detailing the distribution of the tax burden have already been submitted to the committee.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi announced that the first reading of draft bill 463 has been concluded, the deadline for submitting amendments is October 8th at 5:15 PM, and the consideration of the third item on the agenda has been completed.