Today, the Riigikogu passed the Act, initiated by the Government, that transposes into Estonian law the EU directive which aims to enhance cost-effective greenhouse gas emission reductions and low-carbon investments.

Another aim of the Act on Amendments to the Atmospheric Air Protection Act (54 SE) is to bring the Act into conformity with the EU Regulation amending the purposes of the use of revenues generated from the auctioning of aviation allowances, and the decision concerning the establishment of a market stability reserve for the Union greenhouse gas emission trading scheme.

The directive updates the system for greenhouse gas emission allowance trading and specifies the rules for the following trading period, 2021-2030. In addition to that, additional opportunities to make investments will be created. The main new possibility in the following trading period will be the Modernisation Fund which will allow Estonia to support investments in the modernisation of energy systems and in the transition to a low-carbon economy in other sectors. The Government will also be given a possibility to implement the measure under which allowances will be allocated to installations for electricity generation which make investments in the modernisation of the energy sector.

In addition, the purposes of the use of revenues generated from the auctioning of aviation allowances will be amended, and as of 2021 aircraft operators will be obligated to decrease by a linear factor of 2.2 the quantity of allowances allocated for free, similarly to stationary installations.

78 members of the Riigikogu voted in favour of the Act.

The Riigikogu passed another Act and a Resolution:

Under the Act on the Ratification of the Arrangements for Working Holidays between the Government of the Republic of Estonia and the Government of Japan (46 SE), initiated by the Government, Estonia and Japan can issue multiple working holiday visas to 18 to 30 year old nationals of the two countries for up to 12 months.

The inter-state arrangements provide that a person has the right to work without previously registering their visa with the Police and Border Guard Board. According to the Aliens Act, an alien who is staying temporarily in Estonia may work here without registering his or her employment if his or her right to work in Estonia arises directly from the law or the treaty ratified by the Riigikogu. Estonia has concluded similar agreements with Australia, New Zealand and Canada.

The arrangements come into force 120 days after Estonia notifies Japan of the completion of the internal procedures of the Republic of Estonia for the issuance of working holiday visas to nationals of Japan.

79 members of the Riigikogu voted in favour of the Act.

The Draft Resolution of the Riigikogu “Making a Proposal to the Government of the Republic to Enhance the Vitality, Development and Instruction of the Estonian Language” (60 OE), submitted by the Estonian Centre Party Faction, the Estonian Conservative People’s Party Faction and the Faction Isamaa, makes a proposal to the Government to take certain steps. This would include preparing the Development Plan of the Estonian Language for 2021–2035 to ensure, preserve and enhance the vitality, reputation and functioning of the Estonian language in public relations, education, life-long learning and hobby activities, media, politics, enterprise, economy, cultural and creative activities, public space and daily life.

During the debate, Jaak Juske (Social Democratic Party), Signe Kivi (Reform Party), Urmas Espenberg (Estonian Conservative People’s Party), Viktoria Ladõnskaja-Kubits (Isamaa) and Marko Šorin (Centre Party) took the floor.

61 members of the Riigikogu voted in favour of the Resolution.

Five Bills passed the first reading:

The Bill to Implement Regulation (EU) 2019/788 of the European Parliament and of the Council on the European Citizens’ Initiative (74 SE) initiated by the Government, will lower the minimum age for signing a statement of support for a citizens’ initiative from the current age of 18 to 16. The Ministry of the Interior will be designated as the national contact point to assist groups of organisers of citizens’ initiatives if they need help in national issues.

Compared to the current Act, there will be no changes concerning the national governmental authorities who perform the obligations arising from the Regulation in relation to the verification of the signatures of support and the certification of the conformity of the individual online collection systems.

The European citizens’ initiative is an instrument of participatory democracy that allows to make proposals on legal amendments in all fields where the European Commission has the competence to present legislative proposals (e.g. environment, agriculture, energy, transport and trade).

A citizens’ initiative must receive the support of one million citizens from at least seven Member States. Initiatives allow citizens of different Member States to influence the policy-making of the EU. The new Regulation was established to increase the possibilities of EU citizens to participate in the democratic life and to make the European citizens’ initiative less burdensome and more user-friendly for organisers and supporters and thereby to bring the EU closer to citizens.

The Bill on Amendments to the Value Added Tax Act (76 SE), initiated by the Government, will transpose the amendments to the EU Value Added Tax Directive which harmonise the VAT treatment of call-off stock and chain transactions at EU level. The deadline for the transposition of the directive is 1 January 2020.

The explanatory memorandum notes that “call-off stock” means goods that the seller transports to a warehouse in another Member State for the buyer on the basis of an agreement with the buyer, to be redeemed from the warehouse by the buyer. Goods are in the seller’s ownership until they are transferred to the buyer. The amendment will simplify the procedure for cross-border VAT treatment of businesses engaging in business-to-business goods transactions which will reduce the administrative burden for businesses. Under the current procedure, in such cases, the seller of the goods must be identified for VAT purposes in the respective Member State and must declare the sale of the goods as a domestic sale there.

According to the amendment, the seller of goods will declare only intra-Community supply of goods at the moment when goods transported as call-off stock to another Member State are transferred there. That is, the sale of goods will be declared and taxed at a zero rate in Estonia and the seller will have no obligation to register or report such transactions in the other Member State.

The Bill will establish the rules for the VAT treatment of cross-border chain transactions. Chain transaction is a successive transfer of goods, or a chain of transactions whereby goods are transported directly from the first seller to the last buyer of the goods in another Member State. In a chain of transactions, transfer of taxable goods to resellers of other Member States who transport the goods either themselves or through a third party acting on their behalf to the last purchaser of the goods in the chain of transactions is subject to a zero per cent rate. The remaining transactions in the chain are regarded as domestic revenue.

The practice of the VAT treatment of chain transactions varies by Members States and therefore operators lack legal certainty in this regard. Varying practices may result in double taxation or non-taxation of transactions.

The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Act on Amendments to the Social Tax Act, the Income Tax Act and Other Acts (80 SE), initiated by the Government, will amend the excise duty on cigarettes and smoking tobacco, the incentives for small beer producers, and issues relating to the definition of heated tobacco product. In addition, the principles for the revenue stamping of excise goods will be specified in the interests of legal clarity.

The Bill will change the beer production volume limit for small producers from 0.6 million litres to 1.5 million litres a year, in order that undertakings could make longer-term investment plans. The planned rise in the excise duty on cigarettes in 2020 will be lowered from 10 per cent to 5 per cent to reduce the impact of border-trade with Latvia arising from the price difference, and 5-per cent excise duty rises will be established for 2021–2023. The rise in the excise duty on smoking tobacco for 2020, provided for in the Act concerning excise duties, will not be changed, and the excise duty will be increased by around 8.3 per cent in 2021, so that it would comprise 2/3 of the minimum amount of excise duty on cigarettes in 2021. With that, smoking tobacco will be deemed to be subject to tax equivalently to cigarettes. In addition, 5-per cent rises in the excise duty on smoking tobacco for 2022 and 2023 will be provided for.

The Bill on Amendments to the Military Service Act and Other Acts (59 SE), initiated by the Government, will amend the Military Service Act with the aim of organising the planning of special pensions and the prosecutor’s work ability allowance in the state budget.

At present, many special pensions and the prosecutor’s work ability allowance are planned in the budgets of different areas of government, and they are paid centrally in the Social Insurance Board. Under the current law, different ministries, as well as the National Audit Office and the Office of the Chancellor of Justice calculate the special pensions, and in practice the personnel records relating to the calculation have already been mainly consolidated into the State Shared Service Centre.

With the amendment, special pensions and the prosecutor’s work ability allowance will be paid from the state budget, and the reference to the area of government of a specific ministry will be omitted. According to the amendment, in the future, the Ministry of Social Affairs will plan special pensions and the prosecutor’s work ability allowance in its budget, using the data prepared by the State Shared Service Centre. The amendments will not affect the amount of special pensions or the prosecutor’s work ability allowance, or the rights of the persons receiving them. Nor will there be any changes in the payment. Special pensions and the allowance will continue to be paid through the Social Insurance Board.

Under the Bill on Amendments to the Riigikogu Rules of Procedure and Internal Rules Act (36 SE), initiated by the Estonian Reform Party Faction, the Riigikogu will also hear reports by members of the Government on problems in their areas of responsibility and hold debates on sectoral developments in plenary sessions once a year.

The explanatory memorandum notes that if the Bill is passed, the tasks arising from the separation of powers will be specified, and the Riigikogu will have a greater role in instructing the executive power and in policy-shaping. As a result of the amendments, members of the Government will have an obligation to regularly give an overview of their areas of responsibility and further goals. The amendment will improve the political debate as to the direction in which Estonia should develop and how.

Verbatim record of the sitting (in Estonian).

Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu
(Please note that the recording will be uploaded with a delay.)

Riigikogu Press Service
Veiko Pesur
Phone +372 631 6353, +372 5559 0595
E-mail [email protected]
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