The Estonian Parliament has accepted for consideration Bill No. 645 SE, which proposes significant amendments to the country’s tax legislation. The bill outlines a series of tax increases aimed at reforming Estonia’s fiscal framework, with most changes scheduled to take effect on January 1, 2026.
Key elements of the proposal
- Income Tax Changes: Both individual and corporate income tax rates are set to rise from 22% to 24%. In addition, the temporary security tax component, which had been part of the income tax structure, would be removed.
- Business Income Tax: The tax rate on business income would increase from 20% to 22%.
- Value-Added Tax (VAT): The standard VAT rate would be raised from 22% to 24%, effective July 1, 2025. Unlike the income tax adjustments, this change is intended to be permanent.
The proposed legislation is part of a broader effort by the Estonian government to implement fiscal reforms aimed at strengthening the national budget. The government has stated that these measures are necessary to support long-term financial stability.
Further details can be found in the full bill text available on the official Riigikogu website: Bill No. 645 SE
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