The Law of Simplified Taxation of Entrepreneurial Income enters into force on 1 August 2018. Although its purpose is to simplify declaration of income for natural persons and improve tax discipline, it is predicted only little practical impact, according to the assessment of Annika, partner and attorney-at-law of ALTERNA Law firm.
As the new law foresees, using simplified taxation requires opening a separate entrepreneurial account in a credit institution. The entrepreneurial account will be applied automatic tax calculation and charging.
The entrepreneurial account appears useful at first, but actually has many disadvantages, for which reason opening the account needs to be thoroughly considered. To name a few, the new law foresees that natural persons providing services or transferring goods can not deduct costs from their entrepreneurial income. Moreover, different taxation levels and double taxation may also impede using the account.
Annika also notes that simplified taxation is applicable only to natural persons, but not to companies.
The article can be read in magazine Raamatupidamisuudised (5/2017).
Questions regarding this article can be discussed with Annika on email@example.com or by calling 680 6850.
Law Firm ALTERNA