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IMF Praises Estonia's Tax Regime

by Ulrika Lomas, Tax-News.com, Brussels

27 March 2018


The International monetary Fund has praised Estonia's "relatively simple and transparent" tax system in its latest review of the country's economy.

In the concluding statement to its recent mission to Estonia, the IMF said that Estonia's tax regime is efficient and commended the country's approach to limiting exemptions. "This approach has served Estonia well in the past," the IMF stated.

The Fund recommended that Estonia continue its policy of reducing the tax burden on low-income workers, which it said encourages labor force participation.

However, Estonia was urged to reduce the number of changes it makes to the tax system after a number of recent reforms, with the IMF saying that "policy volatility should be minimized and the effect of rates on revenue considered."

Nevertheless, at the same time, the authorities should consider how the tax regime can be adapted to changes in the global economy, the statement said.

"Consideration could be given to converting the land tax into a market value-based property tax in urban areas. This would provide room to lower labor taxes further and offset potential future reductions in European Union transfers," it concluded.

TAGS: tax | property tax | International Monetary Fund (IMF) | Estonia | Europe

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