At today’s sitting, the Riigikogu passed the Act which is intended to attract cargo ships to sail under the Estonian flag again, to increase the Estonian shore sector, and to restore Estonia’s reputation as a maritime nation.
The Act specifies the special income tax regime for companies in the shipping sector and brings it into conformity with European Union state aid rules. The special income tax regime was established by an Act passed by the Riigikogu on 13 February last year. It set a zero per cent income tax rate for the remuneration of the staff of cargo vessels, and passenger ships operating internationally outside the European Union.
The basic conditions of the special tax regime are not amended; only particular conditions are specified. It provides unambiguously the eligible core activities, ancillary activities and other activities of international carriage by sea, in the case of which it is permitted to use a more favourable income tax regime based on tonnage in regard to the revenue from the activities. In the case of income from ancillary activities, the tonnage-based income tax regime can be used only on the condition that the income received does not exceed 50 per cent of the total income from the international carriage of goods or passengers.
A rule is also provided for for situations where a ship makes trips to Estonia as well as foreign countries. If less than 50 per cent of the ports visited by the ship are in Estonia, that is, the ship mostly operates internationally, it is allowed to apply the tonnage regime.
It is specified that, in the case of a group, the tonnage-based income tax regime cannot be used in respect of just one company, but it must be used in respect of all companies belonging to the group that meet the requirements. In the future, a natural person whose income is subject to taxation based on a fixed tax base will not be able to use any options for deduction from income that are permitted by the law under the ordinary regime. Under the Act that was in force earlier, crew members could deduct for example the amounts paid for the acquisition of units of pension funds. The restriction will apply only to income earned as a crew member.
The Act on Amendments to the Law of Ship Flag and Registers of Ships Act and Amendments to the Income Tax Act and Other Associated Acts, and Other Acts (100 SE), initiated by the Government, is planned to enter into force on 1 July 2020.
During the debate, Kalev Kallo (Centre Party), Peeter Ernits (Estonian Conservative People’s Party), Siim Kiisler (Isamaa) and Annely Akkermann (Reform Party) took the floor.
81 members of the Riigikogu voted for the passage of the Act.
The Bill on Amendments to the Electronic Communications Act (138 SE) passed the first reading. It will enable the Government to establish a requirement to coordinate the technology used in communication networks, in order to thereby ensure a high level of security of communication networks. The explanatory memorandum notes that, with a view to ensuring the quality of networks, to minimising the impact of cyber-attacks and to preventing political manipulations, it will have to be ensured that the establishment of communication networks and the provision of communications services by means thereof is effected with the help of secure technology and by reliable partners.
During the debate, Kaja Kallas (Reform Party) and Andres Metsoja (Isamaa) took the floor.
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.)
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