Overview of Chamber of Commerce's Major Activities in the First Quarter
The Estonian Chamber of Commerce and Industry expressed written opinions on 53 draft laws or other policy documents in the first quarter of 2024. The board met in February with the Minister of Economic Affairs and Information Technology, Tiit Riisalo, and other meetings with ministers also took place. The chamber’s staff communicated weekly with various ministries, government agencies, and the Parliament to advocate for the interests of companies.
Key focus areas in the first quarter included various tax issues. The chamber continues to be critical of the car tax and the tax on sugary drinks and opposes the idea of removing the limit that land tax cannot increase by more than 10 percent annually. Proposals were made to increase various tax-exempt thresholds, such as the per diem for foreign business trips and the tax-free limit for health and sports expenses. The Ministry of Finance has begun analyzing these proposals.
Significant attention was also paid to reducing administrative burdens. Suggestions for reducing bureaucracy were collected from companies, and discussions were held with the statistical office on this topic. Proposals were also made to reduce the workload of companies, such as increasing the thresholds for mandatory audits and inspections, which is a proposal by the chamber.
Major topics of the first quarter of 2024
Chamber’s Proposal on Audit and Inspection Thresholds: The Ministry of Finance introduced a draft law to increase the current thresholds for mandatory audit and inspection of annual reports set in the Auditing Activities Act by 25%. The chamber views this increase positively but has proposed raising these thresholds by at least 50%. The thresholds have not been raised since 2016.
Continued Criticism of Car Tax: We approached the Parliamentary Finance Committee regarding a draft law on motor vehicle tax, which proposes an annual motor vehicle tax and a one-time registration fee for registering cars and vans from 2025. In the current economic downturn, the chamber opposes any new taxes, including the motor vehicle tax. The new tax would reduce international competitiveness of businesses and is counterproductive in recovering from the economic downturn. It also raises concerns about its impact on individuals' livelihoods and households for whom a car is a crucial part of mobility freedom.
Opposition to Removing Land Tax Increase Limit: The Regional and Agricultural Ministries have prepared a draft law to change land tax assessment principles, allowing local governments to increase land tax by more than 10 percent annually. The chamber opposes this change as it violates the principles of legitimate expectation and legal certainty, and increases costs for businesses and society during an economic downturn. We also oppose the idea of increasing the maximum land tax rate for commercial and production land from one percent to two percent from 2025.
Suggestions for Long-term Economic Policy: The Ministry of Economic Affairs and Communications has drafted a long-term Estonian economic policy plan, containing nine principles of economic policy management. The chamber supports the creation of this document but has made several additional proposals, ranging from tax policy and legislation to investments and flexible work relationships. The ministry has taken several of these suggestions into account.
Proposals for Reducing Bureaucracy: The zero-bureaucracy project ended in 2018, and while it was a good initiative, many fundamental issues were left pending. Since then, bureaucracy has increased further, not always due to our own officials - a lot of reporting obligations come from Europe. Therefore, in March, we collected examples of unreasonable bureaucracy from companies. Most suggestions were related to statistical reports, and so we communicated with the Statistical Office on reducing bureaucracy. We plan to focus on bureaucracy in other areas in the next quarter.
Proposal to Increase Tax-free Limit for Health Expenses: We proposed to the Ministry of Finance and the Ministry of Social Affairs to increase the tax-free limit for health expenses incurred for promoting employees' health from the current 100 euros to 250 euros per quarter. Additionally, we suggested expanding the list of tax-free health promotion expenses to include healthcare services such as vaccinations, paid health examinations, and even massage services. The Ministry of Finance is currently analyzing whether and to what extent to increase the current limit.
Proposal to Increase Mileage Allowance for Personal Car Use: We approached the Ministry of Finance with a proposal to increase the tax-free mileage allowance for the use of a personal car for business purposes from the current 0.30 euros to 0.45 euros per kilometer, but not more than from the current 335 euros to 500 euros per month. The Ministry of Finance is currently analyzing whether and to what extent to increase the current limit.
Foreign Business Trip Per Diem Increase Proposal: We proposed to the Ministry of Finance to increase the tax-free limit for per diems for foreign business trips, which has remained unchanged since 2016. Currently, the tax-free limit is 50 euros for the first 15 days of a foreign trip, up to a maximum of 15 days per calendar month, and 32 euros for each subsequent day. The Chamber of Commerce has requested the ministry to increase the per diem to 75 euros for the first 15 days of a foreign trip, up to a maximum of 15 days per calendar month, and 40 euros for each subsequent day. This increase takes into account both past inflation and forecasts and is based on past practice, where the limit is raised relatively infrequently. The Ministry of Finance is currently analyzing whether and to what extent to increase the current limit.
Climate Goals for 2040 Must Be Realistic: The European Commission recently suggested reducing greenhouse gas emissions in the European Union by 90% by 2040 compared to 1990. This interim target should ensure that we reach climate neutrality by 2050. We submitted several principles to the Ministry of Climate on setting climate targets, stating that the 2040 climate targets should not only consider how much CO2 emissions need to be reduced by that time to achieve climate neutrality by 2050, but also what measures can be used to achieve the interim target, the impact of these measures on society, including businesses and individuals, and who can or is able to bear the costs associated with achieving the goal. Thus, in setting the target, factors such as technological development and the global competitive situation should be considered.
No Need to Add E-Invoice Requirement to Accounting Law: The Ministry of Finance introduced a draft amendment to the Accounting Act, giving all buyers registered as e-invoice recipients in the business register the right to demand an e-invoice when purchasing goods or services from another accounting entity. We informed the ministry that we do not support this change for intercompany invoices.
Concerns about Execution Procedure Law Draft: The Ministry of Justice drafted a law to amend the Code of Execution Procedure to address issues such as collecting execution costs in the event of the debtor's bankruptcy, merging enforcement proceedings, canceling the enforcement document, and the expiration of public law and criminal law claims. The chamber believes the document fails to analyze an important problem related to the enforcement of wage garnishment orders. We have repeatedly drawn the attention of the Ministry of Justice to the issue of increasing the workload and costs for employers related to the enforcement of wage garnishment orders, but unfortunately, this significant issue for companies and possible solutions have not made it into the development plan. We asked the ministry to address this concern.
Identified Several Problems in the Education Act Amendment: The Ministry of Education and Research introduced a bill that, among other things, raises the compulsory education age to 18, limits free vocational education for adults, and abolishes optional exams in primary school and final exams in high school. We were critical of several changes or completely opposed to them. For example, we opposed abolishing optional exams in primary school and final exams in high school as a condition for graduation. We believe that eliminating exams does not help students better master the curriculum or improve the quality of education, but rather works against these goals. The ministry took our criticism into account and abandoned this change. We were also critical of the idea of making all vocational secondary education programs 4 years long, as there is no practical need for this change, it reduces the system's flexibility, incurs unreasonably high costs, and there are not enough teachers to implement the change.
Advertising Law Needs Amendments: The Ministry of Economic Affairs and Communications drafted an intention to amend the Advertising Act, which contains several dozen ideas for amending the Advertising Act. The ideas relate to the concept of advertising and general principles, as well as alcohol, financial services, and other types of advertising. We sent our positions on 15 ideas to the ministry. In the submission, we pointed out that amending the Advertising Act is necessary to increase the legal clarity of the existing advertising law concepts, general principles, and specific restrictions, thereby simplifying compliance for businesses and making the work of supervisory authorities more effective. It is also necessary because the law needs to take into account new channels of advertising distribution. However, we emphasized that overregulation should be avoided in making changes.
Opposed Making Consumer Dispute Commission Decisions Mandatory: The Ministry of Economic Affairs and Communications prepared a bill that includes several important changes to the Consumer Protection Act regarding consumer dispute resolution. For example, in the future, the execution of decisions of the Consumer Dispute Commission will be mandatory, and it will be possible to apply to a bailiff for enforcement of the decision. We informed the ministry that we are against making the commission's decisions binding.
Part-Time Work Should Be Possible After 30 Days of Sick Leave: The Parliament considered a bill drafted by the Ministry of Social Affairs, according to which an employee can work during sick leave under health-adapted working conditions after two months of sick leave if agreed with the employer. The chamber supported the possibility of working during sick leave, but in our opinion, the rules for working during sick leave should be more flexible for both the employee and the employer. For example, while the bill currently creates an opportunity for the employee to start working from the 61st day of illness, the chamber proposed allowing work from the 31st day of illness.
Annual Leave Should Be 28 Days for Both Public and Private Sector: We approached the Government of the Republic regarding a planned change, which provides that in the future, in addition to officials, the main holiday duration for employees of state and local government authorities will always be 35 calendar days. We are of the opinion that the main holiday duration for both officials and employees of state and local government authorities should be 28 days, similar to private sector employees.
Approached the Chancellor of Justice Regarding Food and Veterinary Supervision Fees: The Estonian Chamber of Commerce and Industry, the Estonian Food Industry Association, the Estonian Traders Association, and the Estonian Agricultural and Commerce Chamber see several problems in the regulation of the hourly fee for food and veterinary supervision actions and therefore asked the Chancellor of Justice to check whether the relevant regulation is in accordance with the constitution. We did not receive a response to our submission from the Chancellor of Justice in the first quarter.
Supported Making Investment Account Rules More Flexible: The Ministry of Finance has drafted a bill to amend the Income Tax Act and the Funded Pensions Act, aimed at making the rules for personal investment accounts more flexible and better considering the needs of small investors. We supported the planned changes and asked the ministry to continue processing the bill quickly.
Launched the Initiative "Seeing Is Believing": The initiative "Seeing Is Believing" by the Estonian Association of Engineers, the Estonian Chamber of Commerce and Industry, and the Estonian educational startup Praktikal calls on companies, communities, and other interested parties to donate practical science experiment kits to community schools. The goal of the initiative is to bring exciting and practical physics and chemistry lessons to every school to maintain students' interest, reduce teachers' workloads, and ultimately reduce the shortage of engineers and other specialists in society. So far, 31 schools across Estonia have joined the initiative.
Private Copying Levy System Needs Updating: The Ministry of Justice plans to make several changes to the Copyright Act, such as changing the rules for fair distribution of private copying levies. The chamber believes the private copying levy system needs broader changes, as the current regulation is outdated. The need for changes arises from the fact that people's consumption habits have changed significantly in recent years, and new technological solutions have emerged. For example, there has been a noticeable increase in the use of paid streaming services, which do not require payment of a private copying levy to rights holders.