First reading of the Draft Act (379 SE) on the Amendment of the Tax Information Exchange Act, the Taxation Procedure Act, and the Income Tax Act.
Session: 15th Riigikogu, 3rd session, plenary session
Date: 2024-03-06 18:54
Participating Politicians:
Total Speeches: 28
Membership: 15
Agenda Duration: 25m
AI Summaries: 28/28 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
Agenda Item 10 of the Riigikogu concerned the first reading of Bill 379, initiated by the Government of the Republic, which amends the Law on Tax Information Exchange, the Taxation Act, and the Income Tax Act. The bill transposes amendments to the Accounting Directive and the Minimum Tax Directive, which concern the obligation of multinational enterprises to submit country-by-country information to the tax authority and establish a 15% minimum tax for large corporate groups.
The Directive applies to groups whose annual turnover exceeds 750 million euros—in Estonia, there are only five such groups (Eesti Energia AS, Tallinna Kaubamaja Grupp AS, MM Grupp OÜ, Bolt Grupp OÜ, and AS Infortar). Estonia applied for and received a derogation for the application of the minimum tax until 2030, as analysis showed that the annual 15% tax liability would not yield budgetary revenue but would significantly increase the administrative burden. Due to the substance carve-out (exception for real economic activity), most Estonian companies will not have any profit remaining that would be subject to the minimum tax.
Decisions Made 3
The Finance Committee adopted the following consensus decisions: to include the bill on the plenary session agenda, to conclude the first reading, and to appoint Aivar Sõerd as the representative of the lead committee. The deadline for submitting amendments was set for 5:15 PM on March 20, 2024.
The proposal by the faction of the Estonian Conservative People's Party to reject the draft bill during the first reading failed to gain support, with the voting result being 13 in favor and 46 against.
The first reading of Bill 379 was concluded, and the consideration of the tenth agenda item was concluded.
Most Active Speaker
The most active speaker was Martin Helme (Estonian Conservative People's Party), who took the floor three times for questions and debate. Helme criticized the draft legislation on the grounds of tax sovereignty, labeling it "globalism on steroids" and arguing that it strips the Estonian parliament of its right to levy taxes. He represented a conservative-left stance, stressing national sovereignty and opposition to international tax regulations. Helme moved to reject the bill, but the motion failed to gain support.
Aseesimees Jüri Ratas
AI Summary
Jüri Ratas referred to agenda item 10 and invited Minister of Finance Mart Võrklaev to the Riigikogu rostrum to present the report on the first reading of Draft Bill 379.
Rahandusminister Mart Võrklaev
AI Summary
The purpose of the bill currently before the Riigikogu is to transpose the amendments to the accounting and minimum tax directives. These amendments increase the public disclosure of tax information by multinational groups and enhance the cross-border exchange of information. However, by awaiting the derogation and the OECD agreement, the intention is initially to reduce the administrative burden and postpone the implementation of the minimum tax.
Aseesimees Jüri Ratas
AI Summary
Deputy Speaker Jüri Ratas offered his thanks and called for questions, requesting Rain Epler to take the floor.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler asks why the time horizon for energy development and climate improvement is limited to the year 2030, and why 2040 or 2050 targets haven't been established. Furthermore, he asks whether this has been discussed and why the period is so brief.
Rahandusminister Mart Võrklaev
AI Summary
Estonia applied for an exemption and secured it until 2030; this was a compromise that was negotiated a couple of governments ago.
Aseesimees Jüri Ratas
AI Summary
Vice-Speaker Jüri Ratas called Martin Helme to the stage.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme asserts that the OECD and international regulations infringe upon Estonia's tax sovereignty. He argues that foreign organizations can dictate tax policy regardless of who holds power in the Estonian parliament, a situation which, given the context of the draft legislation, casts doubt on Estonia's ability to decide its own taxation matters.
Rahandusminister Mart Võrklaev
AI Summary
We will adopt the directive to the minimum extent, delay its implementation in Estonia, and remain sovereign in tax decisions.
Aseesimees Jüri Ratas
AI Summary
Vice-Chairman Jüri Ratas invites Arvo Aller to take the floor.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller explains that, for the first time, the deadline for the minimum tax declaration is 18 months after the end of the first financial year (for the 2024 minimum tax, this is June 30, 2026). Subsequently, the declaration deadline will be 15 months after the end of the financial year, and companies have 6 months to submit their annual report to the commercial register. He simultaneously asks whether those 18 months begin from the end of the financial year, or if June 30, 2026, is a date specifically stipulated in the law, especially if the financial year ends, for example, mid-year.
Rahandusminister Mart Võrklaev
AI Summary
The Finance Minister thanks [the speaker], admits that he didn't manage to listen to all of it right now, and notes that there is talking in the hall.
Aseesimees Jüri Ratas
AI Summary
Deputy Speaker Jüri Ratas says that this won't do.
Rahandusminister Mart Võrklaev
AI Summary
In conclusion, the Minister of Finance will send a written response, as there were many details that could not be adequately tracked during the review of the explanatory memorandum. The response itself will be specific and clear.
Aseesimees Jüri Ratas
AI Summary
Vice-Speaker Jüri Ratas calls upon Martin Helme to take the floor.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme stated that the tax directive must be adopted with as few changes as possible, and we must not cede even minimal tax sovereignty to Brussels if we do not like it. He then asked why we agreed to it in the first place.
Rahandusminister Mart Võrklaev
AI Summary
We secured a derogation from the decision adopted in Europe, allowing us to delay its final entry into force in Estonia, and we are currently transposing the directive at the minimum required level.
Aseesimees Jüri Ratas
AI Summary
This is simply a request to call Aivar Sõerd to the stage.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Using the Estonian exception could lead to tax revenue being lost to other countries: specifically, for a multinational ultimate parent company in Estonia, if the effective tax rate does not reach 15%, the dividend payout rate remains below 53%, which could then be taxed by Finland, for example. Is this the situation we truly want?
Rahandusminister Mart Võrklaev
AI Summary
Finance Minister Mart Võrklaev stated that although it is unlikely, the majority of Estonian companies will not incur a minimum tax obligation due to the real economic activity exemption. Furthermore, they have the option to distribute more profit within Estonia to achieve a 15% effective tax rate (the nominal rate of 22% requires the distribution of 53% of the profit). However, the application depends on various possibilities, and currently, based on the example of five companies, a dividend policy has been established to distribute the largest share of the profit.
Aseesimees Jüri Ratas
AI Summary
Deputy Speaker Jüri Ratas concluded the question period, offered his thanks, and invited Aivar Sõerd, a member of the Finance Committee, to the Riigikogu podium to deliver his report.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Finance Committee unanimously decided to place the draft bill on the plenary session agenda for March 6th, conclude the first reading, and appoint Aivar Sõerd as the lead rapporteur. Concurrently, the definition of cross-border multinational groups (750 million euros in consolidated sales revenue) was addressed, along with potential tax liabilities, including 5% deductions and the criterion unadjusted for inflation, which may affect up to five companies and could expand in the future. The abolition of the dividend tax exemption should not significantly impact shareholder agreements.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The speaker thanks the chair and the rapporteur, and notes that the directive concerns five companies, and asks whether the Commission has discussed which specific companies these are by name.
Aseesimees Jüri Ratas
AI Summary
Deputy Speaker Jüri Ratas thanks the assembly and gives the floor to Evelin Poolamets.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
He named the known companies: Eesti Energia AS, Tallinna Kaubamaja Grupp AS, MM Grupp OÜ, Bolt Grupp OÜ, and AS Infortar.
Aseesimees Jüri Ratas
AI Summary
Jüri Ratas thanked the presenter, announced that there were no further questions, opened the debate, and invited Martin Helme, the representative of the EKRE faction, to speak.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme asserts that this directive threatens Estonia's tax sovereignty, resulting in more bureaucracy, less tax revenue, and greater power for Brussels, which is why the draft bill must be rejected.
Aseesimees Jüri Ratas
AI Summary
Jüri Ratas declares the negotiations concluded and announces the board's position: that the first reading of draft bill 379 must be finished. However, the EKRE faction has submitted a proposal to reject it, and preparations for the vote are underway.
Aseesimees Jüri Ratas
AI Summary
The first reading of Bill 379 has concluded, and it failed to gain support (13 in favor, 46 against, with no abstentions). The deadline for submitting amendments is March 20th at 5:15 PM, and the consideration of the tenth item on the agenda has been completed.