The Estonian Tax and Customs Board (ETCB) will launch a new e-service tool for taxpayers in 2019.
The idea of the service is to give companies an online tool to protect their business from tax risks. Companies see their tax compliance rating and the tax risk rating which shows the probability of being audited.
This solution will help companies to increase trust in their business partners with the ability to share their tax data and compliance rating as well as to ask other companies for such information. The new e-service tool will ensure greater transparency and increases voluntary tax compliance giving companies a possibility to contribute to fair competition. The administrative capacity and efficiency of the ETCB will increase as we provide estimates for all companies registered in Estonia.
- Cost-efficient tax collection, administration
- Maximized tax revenue
- Fair business and tax competition, opportunities to expand
- Voluntary tax compliance
- Increase the number of companies with good tax compliance
- Companies know their risks and make corrections themselves
- Broader target group
- Simple and convenient services
More companies with good tax behaviour in Estonia enhances honest business environment which in return helps to increase competitiveness.
- A lot of public information
- A lot of private information (tax secrecy)
- Disparate and stand-alone data requests
- Actively used self-service portal
- Transaction partners’ background checks are time consuming
- Tax proceedings based on our risk criteria and risk information
- Companies do not know what we know about them
At the moment, obtaining background information about a transaction partner is time consuming and troublesome since the most common queries on the ETCB website are separate individual inquiries. The current e-Tax/e-Customs environment does not comfortably combine information about an entrepreneur and sometimes there is no way to extract data and share it with the third parties.
- Many separated data inquiries on the ETCB website: search of personal reference number for paying taxes; inquiry of tax arrears; Estonian VAT ID verification; VIES VAT number verification; Estonian Master Tariff System; inquiry of non-residency; revenue stamp number control.
- Paid taxes, turnover and number of employees on the ETCB website: the total sums paid by taxable persons, total amount of turnover and the size of the workforce on a quarterly basis shall be disclosed on the tenth date of the month following the quarter.
- In the e-Tax/e-Customs it is possible to draw up a tax information certificate which may be submitted to banks as an additional document to apply for a loan or to other companies for other purposes.
- Legal person data: data on labour, salaries and payments (based on the employment register and from the income and social tax returns; VAT return data; information on transaction partners declared in part A of the VAT return annex (by fields of activity); information on transaction partners declared in part B of the VAT return annex (by fields of activity); data of report on intra-community supply; tax arrears in the period selected and at the date of completion of the certificate.
- Natural person data: income data from natural person’s tax return; income data from employer’s declaration; information from employment register; income data about dividends; historical debt data.
With the solution we shall provide a service for the companies to be able to access public information and gather background information about the company. This data helps to analyse transaction partner’s background and performance. With this tool will create an opportunity for the companies to share and ask data with tax secret which increases credibility and transparency. With public as well as tax secret related data for businesses we are able to provide services that simplify the transaction partner´s background check.
Currently, there is no possibility for entrepreneurs to assess their tax risks early and to prevent tax proceedings or entering into the chain of tax fraud. ETCB shall provide up-to-date and factual overview about a company’s tax compliance with a view of highlighting potential tax risks, with explanations what needs to be changed in order not to be subject to tax proceedings. The company is also provided with the composition of the estimates, the causes of poor tax compliance, and potential tax risks in the light of which a company can improve its ratings through changes in its behaviour. Assessments have a disciplinary effect and increase proportion of self-control which is reflected in the overall improvement in tax compliance of businesses.
Tax compliance rating is based on the information we know about a taxpayer and information what taxpayers have submitted. We evaluate tax risks in six different areas: company’s tax arrears, tax proceedings, submitting declarations, the background of board members, company’s penalties, others areas.
Tax risk rating is based on the information we know about a taxpayer and information which the taxpayers have submitted. We evaluate tax risks in six different areas: purchases, sales, taxable expenses, employment, payments, other areas.
Comparative data and graphs. Company can compare their own data with other companies and reference groups gaining an overview of the location of the company's indicators compared to those operating in the same sector or region.
The Pilot Project
Since October 2017, the ETCB is providing the pilot service of aggregate tax compliance rating in the e-Tax/e-Service environment. The rating consists of five indicators and considers the existence of tax arrears, declarations filed on time, current penalties for tax or customs related offences, tax proceedings conducted in relation to the company and the background of the management board member(s).
All the indicators in conjunction place the tax behaviour of a company in one of four categories, with a very good rating to a very poor rating. In case the tax behaviour of a business operator is very good there is no need to drill down into the data any further, rather, questions and the need to communicate with the ETCB arises if there are deficiencies anywhere and these should be reviewed together with the tax authority.
The tax behaviour ratings are updated monthly and are provided for the previous month with information of the past six months available for viewing.