The Ministry of Finance wishes to rush important draft acts once again

The Chamber informed the Ministry of Finance that it was not satisfied that the Ministry gave only a few working days to express its opinion on the draft regulations related to the registration of employees on the construction site.

The Ministry of Finance sent the referred draft acts to the Chamber for an opinion on the afternoon of 25 September and a reply was expected by 2 October. This means that we were given only five working days to examine, analyse and form our positions. Within such a short time frame, it is very difficult to carry out a substantive process of involvement and provide feedback on the drafts. This haste may result in a situation where the new requirements are not well thought out and cause confusion in implementation.

The different time of entry into force of the amendments leads to ambiguity

The Riigikogu passed the amendments to the Taxation Act already in March 2022 imposing an obligation on construction companies to register people on the construction site in the case of major construction work and submit the corresponding data to the Tax and Customs Board as of 1 October 2023. Implementing acts specifying the law were also due to enter into force at the beginning of October, but these drafts were not completed until six days before the entry into force of the amendments and the implementing acts will enter into force within a certain period of time after the entry into force of the amendments. 

This situation has caused a lot of confusion in construction companies. It remains unclear how the amendments to the Taxation Act, which entered into force on 1 October, must be followed. For example, according to the amendments that entered into force on 1 October, companies must submit to the database of the Tax and Customs Board data on the construction work to be built, construction works, the contracting entity and subcontractors performing construction work and the persons present on the construction site. However, the law states that the list of data to be entered in the database is provided for in the statutes of the register of taxable persons. However, no changes have been made to the mentioned statutes; the changes are still in the draft phase.

It is unclear to the Chamber why the Ministry of Finance sent the draft acts referred to above to the approval round so late. The Ministry of Finance had more than a year and a half to develop draft implementing legislation, to discuss it with stakeholders and then enforce it in such a way that construction companies would also have plenty of time to adapt to the changes.

Construction companies do not have a reasonable time to adapt to the changes

If the draft implementing legislation enters into force within a very short notice period, construction companies may not be able to adapt to all the changes in such a short period of time. For example, it was recently revealed for construction companies that the existing electronic registration systems, which are already in use today, are not compatible with the database of the Tax and Customs Board. Thus, there is an urgent need to develop the existing system or purchase a new system that meets the requirements. If the requirements for the electronic registration system become applicable within the next few weeks, this may not be sufficient time for companies to adjust the existing systems.

A reasonable solution would have been if the relevant implementing acts had been adopted at least half a year before the entry into force of the amendments to the law and the implementing acts had also entered into force from 1 October.

The amendments to the Taxation Act, which entered into force on 1 October, related to the registration of employees on a construction site can be read more here. You can read the draft regulations that specify the law here.