Riigikogu Endorses New Security Tax in Estonia
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Tallinn, Dec 12 (NationPress) The Estonian parliament, Riigikogu, has officially endorsed a bill proposed by the government to establish a security tax aimed at strengthening the nation's defense capabilities.
The security tax comprises three principal elements: firstly, the value-added tax (VAT) will be raised by 2 percentage points commencing in the middle of 2025; secondly, the personal income tax will also see an increase of 2 percentage points, effective from the start of 2026; lastly, a new corporate profit tax, fixed at 2 percent, will also be implemented concurrently with the personal income tax hike.
As per the new legislation, the VAT rate is set to rise to 24 percent starting July 2025, while the personal income tax rate will also increase to 24 percent beginning in 2026, according to reports from Xinhua news agency.
The Ministry of Finance anticipates that the newly introduced tax will yield an additional budget revenue of 113 million euros (approximately 119 million US dollars) in 2025 and 751 million euros in 2026. Specifics regarding the allocation and utilization of these funds will be detailed in the 2025 state budget and the 2025-2028 budget strategy.
The measure was approved in the Riigikogu with a vote count of 53 in favor and 27 against.
Additionally, the Estonian Parliament has ratified the 2025 state budget, projecting revenues at 17.7 billion euros (around 18.5 billion US dollars) and expenditures at 18.2 billion euros (roughly 19.1 billion US dollars).
This budget successfully passed its third reading with 56 votes supporting it and 29 opposing.
In 2025, anticipated revenues are expected to rise by 0.9 billion euros (equivalent to 0.94 billion US dollars), or about 5.2 percent compared to 2024, while expenditures are projected to increase by 0.6 billion euros (approximately 0.63 billion US dollars), or 3.5 percent. The budget allocates 1.9 billion euros (around 2 billion US dollars) for investments and support for investments.
Defence spending is projected to constitute 3.3 percent of the gross domestic product (GDP). Planned investments will focus on initiatives within the defense industry, information technology, Rail Baltica construction, road infrastructure, building renovations, and the adoption of renewable energy.
