Estonian list of low tax territories

Estonia has a so called black list of low tax territories. The tax authority in Estonia will check the business in cases where another party of business transaction is located in one of these countries. It is recommended to give a price list beforehand to the tax authorities.

When one conducts business possibly connected to these territories on the black list the taxpayer must prove that the other party is not located in one of these countries. Good evidence for tax authorities is a certificate issued by local tax authority regarding the size and burden of taxes.  

A legal person (company) is not seen to be located in a low tax rate territory if more than 50 per cent of its annual income is derived from actual economic activity or if the state or territory of location of the legal person provides the Estonian tax authority with information concerning the income of a person controlled by Estonian residents. 

Income tax in Estonia

Income tax is charged on the income of a legal person located in a low tax rate territory (and controlled by Estonian residents). It is irrespective of whether the legal person has distributed any profits to taxpayers or not.

Income tax is charged on business income derived by a non-resident in Estonia. If the non-resident is a legal person located in a low tax rate territory of the black list, income tax is charged on all income derived by the non-resident from the provision of services to Estonian residents, irrespective of where the services were provided or used. Income tax is withheld from payments to a legal person located in a low tax rate territory for services provided to an Estonian resident. 

Estonian companies

Resident companies must pay income tax on payments which are not related to business, unless in situations where income tax has been withheld on such payments pursuant to § 41 (e.g. salaries, royalties etc.) or paid pursuant to §§ 48–51 (e.g. fringe, donations benefits, gifts, expenses not related to business and dividends) of the Income Tax Act.

Black list of Estonia

1. Anguilla
2. Antigua and Barbuda
3. Aruba
4. Bahamas 
5. Barbados 
6. Belize 
7. Bermuda 
8. British Virgin Islands 
9. Brunei Darussalam 
10. Cooks Islands 
11. Cayman Islands 
12. Commonwealth of Dominica 
13. French Polynesia 
14. Gibraltar 
15. Guam
16. Guernsey 
17. Grenada 
18. Hong Kong 
19. Jamaica 
20. Qatar 
21. Labuan 
22. Macao 
23. Montserrat 
24. Netherlands Antilles 
25. New Caledonia 
26. Niue
27. Oriental Republic of Uruguay
28. Oman 

29. Puerto Rico 
30. Republic of Mauritius 
31. Republic of San Marino 
32. Republic of Venezuela 
33. Saint Kitts and Nevis 
34. Saint Vincent and the Grenadines 
35. St. Lucia 
36. The Principality of Andorra 
37. The Principality of Liechtenstein 
38. The Principality of Monaco 
39. The Republic of Chile 
40. The Republic of Costa Rica 
41. The Republic of Djibouti 
42. The Republic of Guatemala 
43. The Republic of Kenya 
44. The Republic of Lebanon 
45. The Republic of Liberia 
46. The Republic of Maldives 
47. The Republic of Nauru 
48. The Republic of Panama 
49. The Republic of Philippines 
50. The Republic of Seychelles 
51. The Republic of the Marshall Islands 
52. The Republic of Vanuatu 
53. The State of Kuwait 
54. Turks and Caicos Islands 
55. Virgin Islands (US) 

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