Government approves 2% rise in VAT and income tax rates
The new coalition government has approved today, 12 June 2023, to raise VAT and income taxes. There will be a rise in VAT by 2% to 22%. This will come into effect on 1 January 2024.
The reduced VAT rate on accommodation of 9% will rise to 13% reduced rate from 1 January 2025. This is a change from the original proposal of moving to the standard rate.
Press publications will rise from 5% to 9%.
Personal and Corporate Income tax rates – Estonia operates a flat-rate model – will also increase 2% from 20% to 22. The Corporate and Personal Income Tax rates will rise 1 January 2025 according to the Bill. Estonia’s tax regime was ranked as the most competitive amongst OECD members by the Tax Foundation. Check our Estonian VAT country guide.
The Baltic state’s economy has been hit hard by the Russian invasion of Ukraine, and it’s economy shrunk by 4.1% in quarter 4 of 2022, and by 1.3% as a whole for 2022.
