Baltic States – CIS, Estonia, Financial Services, Legislation, Markets and Companies, Taxation, Ukraine
International Internet Magazine. Baltic States news & analytics
Friday, 19.04.2024, 06:39
MFA: Estonia put on Ukraine's list of tax havens by mistake
"We are working to eliminate this unpleasant situations and towards
minimizing the damage caused by this incident to Estonian entrepreneurs so that
bilateral economic relations could continue operating, as undoubtedly this kind
of development will damage the relations," Mikser said at the government's
press conference yesterday.
"They should have notified us, but they did not. From the moment that
the Estonian officials knew of this, we have worked towards ensuring the
Estonia is eliminated from this list," the minister said.
Mikser said that Estonia was put on Ukraine's list of tax havens by mistake
as the Ukrainian government has misinterpreted the Income Tax Act. One
basis was when business income is taxed 5% less in the country in question than
in Ukraine, but Estonia's 20% tax liability for dividend distribution is even
higher than in Ukraine.
This kind of taxation does not enable to disguise taxes or avoid taxes, we
have raised the issue through the Ukrainian embassy to the Ukrainian president,
finance minister and the prime minister's economic adviser, Mikser said.
On Dec. 27 last year the Ukrainian government adopted a decision whereby 22
more countries, including Estonia and Latvia, were added to the list of
jurisdictions considered by Ukraine to be tax havens.
The downside to being on that list is that income tax and VAT of 30% is
slapped immediately on the goods, services and work bought from such
jurisdictions. Also supervision over businesses and banks becomes tougher.
The Estonian ambassador to Ukraine, Gert
Antsu, said that the reason for listing Estonia as a tax haven is that
Ukraine views the tax exemption granted by Estonia to reinvested profit as 0%
corporate income tax. In Estonia profits are taxed when dividends are
taken out, and the system does not allow to evade taxes. "Therefore we
find that we have ended up on that list by mistake," the ambassador said.
He said that the decision affects all Estonian businesses which export to
Ukraine. In 2016, such companies numbered 402.