The Riigikogu increased excise duties and established security tax

At today’s sitting, the Riigikogu passed the state budget for 2025 and 10 other Acts which among other things increase the excise duties on alcohol, tobacco and petrol and establish security tax.

The Riigikogu passed the State Budget for 2025 Act (513 SE), initiated by the Government. The volume of revenue will be EUR 17.7 billion, and the volume of expenditure will be 18.2 billion. Compared to this year’s budget, revenues will grow by EUR 0.9 billion or 5.8 per cent and expenditure by EUR 0.7 billion or 3.9 per cent. The budget foresees EUR 1.9 billion in investments and investment grants.

Military defence expenditure will be 3.3 percent of GDP next year. Investments are planned into defence industry, the information technology sector, the construction of Rail Baltic, road construction, support for the renovation of buildings, the promotion of the deployment of renewable energy, and the renovation of the Art Hall and the National Library. The budget provides for an increase in the average old-age pension and in allowances for children with a profound disability and working-age people with a profound disability, as well as the continuation of the financing of the transition to Estonian-language education.

According to the Act, the tax burden in 2025 will be 35.8% of GDP. The general government deficit remains at the level of three percent of GDP, which fulfils the Maastricht budget balance rule.

In next year’s state budget, the Government has set the goal of ensuring the security of the people and the state, cleaning up public finances, and ensuring sustainable economic growth.

Andrei Korobeinik from the Centre Party Group, Urmas Reinsalu from Isamaa Parliamentary Group, Marek Reinaas from Estonia 200 Parliamentary Group, Priit Lomp from the Social Democratic Party Parliamentary Group, Maris Lauri from the Reform Party Parliamentary Group and Siim Pohlak from the Estonian Conservative People’s Party Parliamentary Group took the floor during the debate.

The Centre Party Group moved to suspend the third reading of the Bill on next year’s state budget. However, as 29 members of the Riigikogu supported the motion but 56 were against, the plenary did not support it.

On the final vote, 56 members of the Riigikogu supported the passing of the state budget and 29 voted against it.

The Riigikogu passed the Act on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and Other Acts (510 SE), initiated by the Government. It raises the excise duties on alcohol, tobacco, and petrol from 2025 to 2028.

Together with the excise duty increases already established, the excise duty rate on tobacco products will increase by 10 percent in 2025 and 2026, and the excise duty rate on alcohol by five percent in 2025 and 10 percent in 2026. According to an amendment, the excise duty on alcohol and tobacco products will also grow by five percent in 2027 and 2028. According to an amendment made during the proceedings, the additional increase in alcohol excise duty planned for July next year is cancelled in order to prevent a growth in trading in the border area.

The rate of excise duty on unleaded petrol and other fuels taxed at the same rate, including aviation spirit, will rise by five percent over the next four years. The excise duty will increase from 1 July in 2025 and from 1 May in 2026, 2027 and 2028. The rate of excise duty rate on petrol has remained unchanged since 2018.

In addition, in the course of the proceedings, the Riigikogu decided to abolish the derogation limiting the activities of the Physical Fitness and Sport Endowment. Currently, 3.5 percent of the alcohol and tobacco excise duty received is allocated to the Cultural Endowment of Estonia, while 0.5 percent of the excise duty is directly allocated to the Physical Fitness and Sport Endowment. The amendment will not affect the amount allocated to the Cultural Endowment of Estonia, but it will eliminate the derogation, making the financing of endowment funds more legally clear and uniform. In the future, all eight endowments of the Cultural Endowment of Estonia will receive funds on the basis of uniform distribution principles.

 Aleksandr Tšaplõgin from the Centre Party Group, Anti Poolamets from the Estonian Conservative People’s Party Group, Aivar Kokk from Isamaa Parliamentary Group, Annely Akkermann from the Reform Party Group and Madis Kallas from the Social Democratic Party Parliamentary Group took the floor during the debate.

57 members of the Riigikogu voted in favour of passing the Act and 27 were against it.

The Riigikogu passed the Security Tax Act (512 SE),  initiated by the Government. It establishes a security tax until the end of 2028 in order to collect additional tax revenue for the development of Estonia’s defence capability and for security investments. The security tax will consist of three components: two per cent on turnover starting from 1 July 2025, two per cent on the income of a natural person starting from 1 January 2026 and two per cent on corporate profits starting from 1 January 2026.

In the second reading the Riigikogu made an amendment to the Bill that was directed against abuses. Security tax will be charged without taking into account transactions, series of transactions, and accounting entries the main purpose of which is to obtain a tax advantage. Since the security tax and advance payments will be based on unconsolidated profit, the possibility to pay advance payments on the basis of the profit of previous quarter was included in the Act.

For the sake of clarity, a specification was also included in the Act according to which the profit of the unconsolidated income statement of the parent company will be taxed. The calculation of the profit or loss of subsidiaries and associated companies was also specified in order to avoid double taxation and an amendment was made to the range of companies that can take the quarterly reporting of profits as the basis when calculating their advance payments of security tax.

The projected impact of the amendment on the budget is EUR 113 million in 2025, EUR 751 million in 2026, EUR 784 million in 2027 and EUR 822 million in 2028. According to the explanatory memorandum, the more precise targeting and breakdown of expenditure will be set out in the State Budget for 2025 Act and the State Budget Strategy for 2025–2028.

Mati Raidma from the Reform Party Group, Martin Helme from the Estonian Conservative People’s Party Group, Aivar Kokk from Isamaa Parliamentary Group, Anastassia Kovalenko-Kõlvart from the Centre Party Group and Peeter Tali from Estonia 200 Parliamentary Group took the floor during the debate. Tanel Kiik made a speech on behalf of the Social Democratic Party Group.

53 members of the Riigikogu were in favour of passing the Act and 27 were against.

Eight other Acts were passed

The Riigikogu passed the Act on Amendments to the Government of the Republic Act and Amendments to Other Associated Acts (505 SE), initiated by the Government. Under the Act, the Ministry of Justice will be renamed the Ministry of Justice and Digital Affairs from the beginning of the new year and the digital development sector functions of the Ministry of Economic Affairs and Communications will also be transferred to it.

According to an amendment, tasks related to digital society policy, public e-services, digital development and cybersecurity, state information systems, central network and information systems and telecommunications will move to the Ministry of Justice and Digital Affairs. In addition, the Information System Authority, the Estonian Information and Communication Technology Centre, the State Infocommunication Foundation and the Estonian Internet Foundation will move from the Ministry of Economic Affairs and Communications to the area of government of the Ministry of Justice and Digital Affairs.

According to an amendment, the issues of accessibility, land use policy, spatial planning and the land and spatial sector which are currently in the area of government of the Ministry of Regional Affairs and Agriculture will be transferred to the Ministry of Economic Affairs and Communications. The Land and Spatial Planning Board which is being established will also move from the Ministry of Regional Affairs and Agriculture to the area of government of the Ministry of Economic Affairs and Communications.

The Ministry of the Interior will be tasked with planning and coordinating civil protection. The Ministry of the Interior is already spearheading the development of civil protection, and the Rescue Board is performing the functions of a civil protection authority, but so far there is no legal provision for a lead authority for civil protection. According to an amendment, the Ministry of the Interior will not lead the civil protection activities of other ministries or their sectoral developments but will begin to coordinate the overall civil protection policy.

In addition, the Act amends the requirements for the office of State Secretary and abolishes the requirement of higher education in law that has been in place since 1995. According to the explanatory memorandum, the State Secretary is a senior manager whose role requires extensive knowledge and experience not only in the field of law but also in the field of administration, management, and politics. The explanatory memorandum also notes that the State Secretary can rely on the legal experts of the Government Office in the performance of his or her legal tasks.

Urmas Reinsalu from Isamaa Parliamentary Group, Madis Kallas from the Social Democratic Party Group and Anastassia Kovalenko-Kõlvart from the Centre Party Group took the floor during the debate.

57 members of the Riigikogu supported the passing of the Act and 24 were against.

The Riigikogu passed the Act on Amendments to the Public Transport Act (499 SE), initiated by the Government. It creates the bases for the payment of compensation to carriers in commercial regular service for their obligation to carry people who are entitled to free travel. Namely, the European Court of Justice has ruled that, under a European Union Regulation, undertakings must be compensated for the costs arising from the obligation to transport passengers for free, which have not been fully compensated in Estonia so far.

The new Act will not change the range of people who are entitled to free travel but, in order to receive compensation from the state, commercial bus companies will have to check passengers’ documents certifying their right to free travel and, when applying for subsidy, they will have to provide, among other things, data on the people who have travelled with zero fare tickets. It will be possible for the Ministry of Regional Affairs and Agriculture to check the accuracy of the data     provided before a compensation is disbursed.

For pre-school children and people accompanying disabled people, this means that, starting from the new year, when travelling on a commercial regular service bus, they will have to be prepared for the bus driver to ask for the personal identification code or date of birth of the person who receives a travel fare concession when issuing a zero-fare ticket. The Minister of Regional Affairs and Agriculture will establish the details of the list of the data to be submitted for the application for subsidy and the procedure for the payment and reimbursement of subsidy for commercial regular service carriers.

75 members of the Riigikogu voted in favour of passing the Act and one voted against.

The Riigikogu passed the Pre-school Education Act (419 SE), initiated by the Government, which establishes a comprehensive pre-school education system, makes the childcare service part of the pre-school education system and  harmonises the requirements for childcare facilities and existing crèches. The childcare service will remain a social service only for the cases where a child has a high need for care and assistance.

The Act raises the qualification requirements in place for the staff of preschool child care institutions. The director of a preschool will have to have at least a master’s degree, a childminder will have to have at least a secondary education and a level 4 qualification as a childminder and an assistant teacher will have to have at least a secondary education, a level 4 qualification as a childminder, or pedagogical competences. In the future, childcare facilities will have to draw up a childcare curriculum, similarly to the current crèches. Pre-school education in preschool and childcare will have to be organised in Estonian according to the national pre-school education curriculum.

The Act is also intended to eliminate waiting lists for preschool. To this end, the Act provides that local governments will have to guarantee a place in a childcare facility for all children aged between 1.5 and 3 years, and in a preschool for children aged between 3 and 7 years, at the request of a parent, taking into account the location preferred by the parent. If there are no vacancies at the parent’s preferred childcare facility or preschool, a place will have to be offered in a childcare facility or preschool close to home. A two-month time limit is provided for the municipality to process applications.

At a parent’s request, the service may also be provided on the territory of another city or municipality if there is a relevant agreement between the local governments. In addition, the Act supports cooperation with the private sector in the guaranteeing of childcare and preschool places, as it is possible for municipalities to buy services from private companies. In such cases, the requirements in place for municipal preschools will extend to private preschools. In private preschools that have not been mandated by the municipality to carry out their task, instruction and education activities may continue in another language, but Estonian language training will have to be ensured according to the national pre-school education curriculum.

In general, the Act makes no changes to the system for funding pre-school education. The Act provides for the possibility of supporting local governments from the state budget for the continuing training of teachers, for Estonian language instruction and for the acquisition of teaching materials. In addition, according to the Act, parents will also be able to apply for income tax refunds for their children who are attending childcare.

During the proceedings, an amendment was made to the Act under which, in order to guarantee job security for a trainee teacher, the director of a preschool can enter into a contract of employment for up to three years instead of a one-year contract of employment with a person undergoing teacher training. The standard duration for completing the curriculum of pre-school education teacher is three years.

Another amendment provides for harmonizing the ratios of child care groups with the ratios of preschool child care groups and preschool groups where the group has a qualified teacher. In addition, an amendment was made to the Act to specify that private child care facilities can also operate in residential buildings and on residential land so that the existing child care facilities would be able to continue in their current locations and new child care facilities would have this flexibility as well.

 Tõnis Lukas from Isamaa Parliamentary Group, Vadim Belobrovtsev from the Centre Party Group, Kadri Tali from Estonia 200Parliamentary Group, Margit Sutrop from the Reform Party Group and Helle-Moonika Helme from the Estonian Conservative People’s Party Parliamentary Group took the floor during the debate.

54 members of the Riigikogu supported the passing of the Act, 25 were against and there was one abstention.

The Riigikogu passed the Act on Amendments to the Child Protection Act and Other Acts (427 SE),  initiated by the Government. Its purpose is to improve the identification of and assistance to children in need and to increase the number of foster families.

Although everyone has a duty to report a child in need to the local government, many cases come to the attention of child protection too late. The role of people working with children in identifying children in need will therefore be increased. The Act lists specialists, such as teachers, coaches, and doctors, who have a special duty of care to recognise a child’s need for help and to inform the child protection worker of the municipality thereof. The right of municipalities and the Social Insurance Board to process personal data in the performance of child protection tasks is also specified.

An amendment increases support for foster, guardianship and adoptive families who have taken a child from another family to be raised in their family and establishes the content, organisation, volume, and funding of the support services for family-based alternative care.

The Act also creates the possibility for information on children in need of permanent support due to their health condition to be automatically transmitted to municipalities via information systems early on. A list of such health conditions will be set out in a regulation. However, according to a provisional agreement they will be blindness in both eyes, cancer diagnosis, rare disease, cerebral palsy, and intellectual disabilities. The aim of the amendment is to integrate the health and social services offered to children and families in order to ease the burden on parents. Once the information about a child is received, the municipality and the Social Insurance Board will have an obligation to offer support measures to the family without the parent or guardian having to apply for assistance themselves.

Kert Kingo from the Estonian Conservative People’s Party Group and Riina Solman from Isamaa Parliamentary Group took the floor during the debate. Züleyxa Izmailova made a speech on behalf of the Social Democratic Party Group.

51 members of the Riigikogu were in favour of passing the Act and 20 were against.

The Riigikogu passed the Act on Amendments to the Waste Act and the Packaging Act (430 SE), initiated by the Government. It makes mostly technical amendments to the Act which help understand more clearly the existing rules and do not change the existing principles.

The Act makes it simpler and clearer to give away tyres. The creation of a single producer responsibility scheme will reduce costs through economies of scale, and in the future businesses and consumers will be able to bring unlimited quantities of scrap tyres to collection points free of charge. An amendment also specifies the terms of motor vehicle manufacturer and manufacturer of motor vehicle components. The Act also specifies the provisions relating to the security and insurance required when applying for an environmental permit for the storage of waste and the management of hazardous waste.

The Act clearly outlines the requirements for the buying up and reception of products of concern to reduce disputes and ensure proper waste management. In addition, the limitation period for misdemeanours concerning violation of the obligation to take back, collect, recover, and dispose of waste generated by products of concern will be extended from two to four years.

An amendment made during the proceedings will create the possibility for packaging undertakings to apply a deposit to all packaging on the basis of the Packaging Act. The procedure in force until now allowed adding a deposit only to certain types of packaging, but did not allow to exempt from VAT such a deposit for which there was no regulation in the Packaging Act.

Tiit Maran from the Social Democratic Party Group and Andres Metsoja from Isamaa Parliamentary Group took the floor during the debate.

58 members of the Riigikogu voted in favour of passing the Act and 10 were against it.

The Riigikogu passed the Public Health Act (433 SE), initiated by the Government. It establishes a new consolidated text of the Act which updates the sector and replaces the Public Health Act that has been in force since 1995. The Act establishes the responsibilities of all parties – the state, municipalities, and organisations – and updates the requirements and restrictions to protect human health. More attention will be paid to prevention and children.

The Act sets out environmental and catering requirements for preschools, schools as well as social welfare institutions. For example, the role of head of school in creating an environment conducive to healthy eating will be increased. The Act bans the provision of tanning and tattooing services to minors and lays down requirements for electromagnetic fields, cosmetic products, beauty services, and swimming pools.

The new regulation sets restrictions on the use of products and services that pose a direct health risk. Restrictions are imposed on the use of toxic plants, animals, and plant and animal products and dangerous chemicals in order to protect or improve health.

The Act extends the supervision competence of the Health Board and gives the Board the right and obligation to exercise supervision over the legitimacy of the commercial practices relating to products and services, including advertising, in order to protect human health. The Act also updates the maximum fine and penalty payment rates in order that they would be sufficiently effective.

Another important amendment is made to the Act on Narcotic Drugs and Psychotropic Substances and Precursors thereof so that new psychoactive substances potentially dangerous to the health of the population could be removed from the market more quickly in the future.

During the debate, Tanel Kiik took the floor on behalf of the Social Democratic Party Group and Kalle Grünthal spoke on behalf of the Estonian Conservative People’s Party Parliamentary Group. Riina Solman from Isamaa Parliamentary Group and Karmen Joller from the Reform Party Parliamentary Group also made speeches.

54 members of the Riigikogu supported the passing of the Act and 10 voted against.

The Riigikogu passed with 67 votes in favour the Act on Amendments to the Imprisonment Act and Amendments to Other Associated Acts (474 SE), initiated by the Government, to ensure more effective protection of legal order and prison security, and to contribute to directing prisoners to law-abiding behaviour.

The Act specifies the right of the prison service to carry out background checks in justified cases and provides for clearer legal bases for this. It also specifies the provisions concerning the database of prisoners, detained persons, persons in custody and probationers.

The Riigikogu also passed the Act on Amendments to the Customs Act (515 SE), initiated by the Government. It increases the rates of fines for legal persons which have remained unchanged in the Customs Act since 2001 and brings the fine rates into conformity with the rates provided for in the Penal Code.

In order to make the work of the investigation department of the Tax and Customs Board more efficient, the list of the special equipment of the Board is amended, and binding means, a device for forcibly stopping vehicles, and a technical barrier are included in it. In addition, the Director General of the Tax and Customs Board and the staff of the Estonian Academy of Security Sciences are given the right to wear the uniform of the Tax and Customs Board.

54 members of the Riigikogu voted in favour of passing the Act and 14 were against it.

Three Bills passed the second reading

The Bill on Amendments to the Code of Civil Procedure and Other Acts (establishment of the collective representative action procedure) (334 SE),  initiated by the Government, passed the second reading in the Riigikogu. It will transpose the European Union directive intended to ensure the availability of collective representative action to consumers in Member States. The aim is to boost consumer confidence, to promote fair competition and to create a level playing field for undertakings operating in the internal market. It will be a new opportunity in the Estonian legal space where competent authorities, and not consumers who have been harmed, will be able to perform procedural acts in judicial proceedings.

According to the Bill, the Consumer Protection and Technical Regulatory Authority, the Financial Supervision Authority and the Data Protection Inspectorate as well as other qualified entities who will be entered on a list maintained by the Ministry of Economic Affairs and Communications will be given the right to bring collective representative actions. In addition, a court may give the right to bring action.

For the second reading, the Legal Affairs Committee incorporated an amendment into the Bill to set the minimum number of consumers to accede to a claim in the case of a collective representative action – 10 people if a consumer association turns to court and 20 people if a state agency files a statement of claim. In addition, the Committee made a specification to the Bill so it would be unambiguously clear that collective representative action would be applied only in the event of infringement of collective interests of natural persons. It is also provided that decisions made in collective representative actions will be made public, as there is a public interest in them due to the large number of consumers.

Qualified entities and organisations designated by Member States of the European Union and entered on the list maintained by the European Commission can bring cross-border representative actions.

The Bill on Amendments to the Accounting Act and Amendments to Other Acts arising therefrom (516 SE), initiated by the Government, passed the second reading. It will transpose the European Union sustainability reporting directive. It will also transpose a directive changing the size criteria for companies.

The Bill will amend national requirements in the preparation and auditing of annual reports of undertakings. As the emergence and scope of the sustainability reporting obligation depends on the size category of the company, the new thresholds for size categories will be set at the highest level allowed under the Directive. The purpose of the Bill is to keep the increase in the reporting burden due to the new requirements to a minimum in Estonia.

The updated requirements will set an obligation for all large undertakings and listed undertakings to publish a sustainability report as part of their management report for the financial year and to prepare it in accordance with the European Sustainability Reporting Standard. In Estonia, the sustainability reporting obligation covers an estimated 300 companies and groups i.e. approximately 1.4 percent of the private limited liability companies and public limited liability companies operating in Estonia. An estimated third of them will be able to use the consolidation exception under which no sustainability report will need to be prepared if the same information has already been published in the parent company’s report.

Mart Maastik, Urmas Reinsalu and Aivar Kokk from Isamaa Parliamentary Group and Andres Sutt from the Reform Party Parliamentary Group took the floor during the debate.

Isamaa Parliamentary Group moved to suspend the second reading of the Bill, but the plenary did not support the motion. Nine members of the Riigikogu supported suspension of the deliberation, 49 were against and there was one abstention.

The Bill on Amendments to the Earth’s Crust Act (435 SE), initiated by the Government, also passed the second reading. It will suspend the procedures for new oil shale mining permits until 1 January 2026.

According to the explanatory memorandum, authorisation procedures will have to be temporarily suspended until the climate impact of oil shale mining and use, the measures that will help achieve Estonia’s climate objectives, and the needs and options for using oil shale will have been clarified. Suspension of authorisation procedures will not limit the current activities of oil shale companies.

Derogations will be allowed under the Bill if an extension is to be carried out on an area bordering on an existing mine and a permit therefor already exists. Nor will the state extend the period of validity of the permits for the areas to be extended until 2026. Derogations will only be granted if this will help extract oil shale from the ground more expediently and do so in compliance with environmental requirements.

Arvo Aller from the Estonian Conservative People’s Party Group and Andres Metsoja from Isamaa Parliamentary Group took the floor during the debate,

Isamaa Parliamentary Group moved to suspend the second reading of the Bill, but the motion was not supported. Nine members of the Riigikogu supported suspension of the deliberation but 49 were against.

A Bill passed the first reading

The Bill on Amendments to the Building Code, the Administrative Co-operation Act and the Water Act (531 SE), initiated by the Government, passed the first reading in the Riigikogu. Its purpose is to reduce bureaucracy and to shorten the time for the application for building permits for certain drilled wells.

According to the Bill, in the future, the Environmental Board will only approve the projects of drilled wells and boreholes the construction of which may have a significant environmental impact. In ordinary circumstances, if a drilled well for a detached house or a geothermal borehole is being constructed, the approval of the municipality will be sufficient.

The amendments also concern agglomerations which will be approved by the Director General of the Environmental Board instead of the minister in the future. The right to organise the evaluation of persons responsible for water sampling will be given from the Ministry of Climate to competent a legal persons in private law under contracts under public law and the establishment of the plans related to the implementation of river basin management plans will be transferred from the ministry to the level of the Environmental Board.

Andres Metsoja from Isamaa Parliamentary Group took the floor during the debate.

The sitting ended at 10.49 p.m.

Verbatim record of the sitting (in Estonian)

Video recording will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
Karin Kangro
+372 631 6356, +372 520 0323
[email protected]
Questions: [email protected]