Entrepreneurs Wish To Cooperate More With Tax Administrator To Combat Envelope Wages

A survey carried out among the entrepreneurs of the Estonian Chamber of Commerce and Industry revealed that the entrepreneurs feel that the share of envelope wages in their sector has decreased as compared to the previous year. Furthermore, the entrepreneurs think that the share of employees who only receive envelope wages has slightly decreased.

Contrary to the trend in the previous surveys, the number of the respondents who think the share of envelope wages paid in their sector is lower, has increased. Nearly half of the entrepreneurs estimate the share of envelope wages to be up to 5 percent and nearly a fifth of the entrepreneurs think that the share of the envelope wages is 6-10 percent.

Mait Palts, Director General of the Estonian Chamber of Commerce and Industry said that the results of the last survey show a positive trend that the increasing salary pressure has not brought along a significant raise in paying envelope wages. “Although the situation with the envelope wages continues to be concerning and the increasing pressure to raise wages forces honest entrepreneurs to make even greater efforts, we are glad to see that they are not turning to dishonest methods, although the pressure is strong,” said Palts and emphasised that in order to ensure continuously good collection of taxes and honest competition, the tax authority together with the market participants must think of new solutions for control and other preventive measures, and the legislator must analyse how to use the tax system to motivate honest payment of taxes.

Rivo Reitmann, Deputy Director General of the Tax and Customs Board said that the Board is focusing on cooperation and information exchange in relation to monitoring envelope wages at the public procurement sites. “Construction procurements are a third of the annual two billion-euro public procurements volume, but recent checks showed that seven percent of builders who worked at the public procurement sites were unregistered, i.e. received fully unreported wages,” said Reitmann.

“Public procurements play an important role in the economy and through organising procurements fair competition can be influenced. It is our wish that the state’s money would not go to a company that does not follow tax rules and all organisations that organise procurements play an important role in it. That is why we are very glad that Elektrilevi as one of the biggest contractors in the country is applying such principles in their procurements,” said Reitmann.

Kristo Külljastinen, head of the grid construction area of Elektrilevi said that the company performs the majority of work in cooperation with partners, concluding, on an average, three public procurement contracts each working day. Külljastinen emphasised that for Elektrilevi it is very important to ensure quality in grid works as well as customer communication and occupational safety. “Our experience shows that companies that treat their employees fairly and pay taxes are more trustworthy in other operations. Therefore, we are implementing a condition in all our contracts, according to which a partner company must pay at least 70% of the average of its area of activity as salaries,” said Külljastinen.

The Chamber carries out the survey on envelope wages among its members already since 2014.