Cover: A piggy bank in Estonian flag colours. The image is illustrative.
Estonia has the most competitive tax system in the OECD – for the sixth year in a row
According to the Tax Foundation, Estonia has the most competitive tax system in the Organisation for Economic Co-operation and Development – a ranking the country has held for the last six years.
The Tax Foundation’s 2019 International Tax Competitiveness Index points out that Estonia ranks first overall, the same as in 2018, and for the sixth consecutive year.
The foundation says Estonia’s strengths are that the country’s corporate income tax system only taxes distributed earnings, allowing companies to reinvest their profits tax-free; the VAT applies to a broad base and has a low compliance burden; and that property taxes in the country only apply to the value of land.
The Estonian tax system does have some weaknesses, though, according to the foundation, but they’re relatively insignificant. For example, the Tax Foundation points out that Estonia has tax treaties with just 58 countries, below the OECD average – which is 77 countries; Estonia’s territorial tax system is limited to European countries; and that Estonia’s Controlled Foreign Corporation rules are more stringent than the average OECD country.