Since the summer of 2020, a new e-service is available, through which the company will receive feedback and information about its tax behavior from the Estonian Tax and Customs Board (ETCB).
E-service of tax behaviour ratings – what is it and what is it for?
Tax behaviour ratings is a new e-service offered by the ETCB to provide companies with feedback and information about their tax behaviour. The service is based on the analysis of data business operators submit to the ETCB and helps them keep their tax matters in order.
Companies provide data to the ETCB on a monthly basis, but do not receive regular feedback on the accuracy of the data provided. So far, the main form of feedback has been the tax proceedings carried out, which are burdensome and sometimes discouraging in nature.
The e-service of tax behaviour ratings is based on the greater openness of the ETCB’s control activities and cooperation between the tax authority and business operators. Tax behaviour ratings allow business operators to see themselves from the ETCB’s point of view. In the event of deficiencies in tax data and/or behaviour, business operators can immediately proceed to correct the deficiencies, thereby preventing them from becoming subject to tax control.
What kind of information is available and who can see it?
In the service of tax behaviour ratings, users can find data on companies registered in Estonia. The service assembles publicly available data in a single environment, which currently requires several queries to the ETCB’s information systems.
Publicly available data
The tax behaviour ratings make the following public general information on each business accessible to all: information on the registration as a person liable to value added tax; existence of tax arrears; activity licences issued; customs authorisations issued; data for last four quarters regarding taxes paid, number of employees and turnover.
In addition to publicly available data, two tax behaviour ratings are calculated per company: the tax compliance rating and the tax behaviour adequacy rating. Ratings shall be calculated on the basis of data protected by tax secrecy and shall be accessible only to the company’s legal representative. If a member of the management board wishes to give an accountant access to company’s ratings, he or she can grant an accountant the access permissions named “Using the service of ratings”.
How are the ratings formed?
The ratings of tax compliance and tax behaviour adequacy are based on companies’ tax behaviour. Both ratings consist of six components, each accompanied by an explanation clarifying what is taken into account for calculating its value.
Should there be any shortcomings in company’s tax matters, a comment will be displayed. The comment will provide guidance on how to remedy the shortcoming.
Values of ratings and their definitions
- 3 (green) – tax matters are in order
- 2 (yellow) – there are some deficiencies
- 1 (red) – there are significant deficiencies
The service shall display the ratings of the maximum period of 12 months. The history of ratings shall be displayed from January 2020.
Ratings and data are usually updated once a day. Different data and components of ratings are updated according to different rules. The bases for calculating the tax behaviour ratings are constantly being improved. Where new tax circumstances arise, such explanations shall be included in the service in order to provide companies with the most recent and objective feedback on their tax behaviour.
- Bases for the calculation of ratings (295.5 KB, PDF) 25 June 2021
Tax compliance rating provides information on whether a company fulfils its obligations in a correct and timely manner. In addition, the wages declared by a company are compared with the average wages in Estonia for the same positions.
The rating is calculated on the basis of the following components:
- outstanding tax arrears and related proceedings,
- tax returns with correct information submitted on time,
- tax proceedings conducted over the past 12 months,
- punishments in force for tax and customs offences,
- average wages declared on form TSD,
- outstanding debt of the responsible person and related proceedings.
Tax behaviour adequacy rating draws attention to potential inconsistencies and shortcomings in tax behaviour and thus allows a company to improve its tax behaviour.
The rating is calculated on the basis of the following components:
- data in the employment register,
- data entered to the VAT return and its annex,
- data entered to form TSD,
- other observations and circumstances – an informative component having no effect on the tax behaviour adequacy rating. For example, we notify you when the management board of your company’s transaction partner has changed.
What opportunities does the new e-service offer?
Companies can view their data and ratings calculated on the basis of this data.
The use of the service is optional. The aim is to provide a company with feedback on its tax behaviour. Direct feedback allows business operators to eliminate shortcomings in good time and avoid concerns that the ETCB might have anything to disapprove. If a company adjusts its tax behaviour by means of the service of ratings, it is the most effective solution both for the company and the ETCB.
Share and disclose ratings
Once a company discloses its ratings, they will be available to everyone through the search of public data on the website of the ETCB as well as in the e-MTA (“Ratings” – “Search data” – “Company search”).
In the process of sharing your ratings, you grant a company or private person of your choice a permission to access your company’s ratings. In the case of sharing the ratings with another company, the ratings will be available to the company’s legal representatives and their authorised representatives.
Ratings can be shared or disclosed only by the representatives of a company who have the access permission of the main user of the rating service. Such a permission is included for example in the package of legal representative. The representative of a company can decide whether and with whom (other natural or legal persons) and for what period he/she shares the company’s ratings. They can also stop sharing and/or terminate a disclosure at any time.
If the ratings of a business partner are in order or there are some shortcomings (the rating is not in red colour), you can enter into a transaction with the partner with greater confidence. The colour red refers to significant deficiencies, in which case we recommend you check the background of the business partner more carefully.
Tax behaviour ratings e-service
The development of the tax behaviour ratings service has received funding from the European Regional Development Fund, and the service is being developed by Nortal AS.