Tax reform will be given in four acts

The government of Kai Kallas took into account the demands of the opposition.Photo: Pavel Golovkin, Scanpix

The Government will divide the package of tax bills into four parts, each separately passed by the Riigikogu. This is a concession to the opposition.

The government decided to divide the tax reform into four parts – now these are four separate laws that have already been approved government and will soon enter the Riigikogu.

Firstly, these are amendments to the Law on excises on alcohol, tobacco, fuel and electricity, as well as other laws, writes ERR. It fixes the pace of increasing excise taxes on alcohol, cigarettes and smoking tobacco by 5% per year. They refused to increase excise taxes on special diesel fuel – it will be 21 euros per 1000 liters from May 2024, that is, at the minimum level allowed in the EU.

Secondly, the bill to amend the Gambling Tax Law – the tax on gaming tables will increase from 1278.23 euros to 1406 euros.

Thirdly, this is the increase in turnover tax from January 1, 2024 from 20% to 22%. In addition, from January 1, 2025, hotel services will be taxed at the standard rate of 22% instead of 9%.

And finally, the fourth part is amendments to the Income Tax Law and the Law on Service in the Defense Forces. They increase the income tax rate from 20% to 22% from 2025, remove the preferential rate of 14% on profits regularly distributed by enterprises. From 2025, they will introduce a single tax-free income of 700 euros per month, or 8400 euros per year. An exception will be made for old-age pensioners whose non-taxable income is equal to the average old-age pension.

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