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Swedbank manager: Estonia's system of corporate income tax must remain intact.

Swedbank Estonia CEO Robert Kitt, who met with the Estonian politicians negotiating a new coalition deal last week, said his priority at the meeting was to make sure that the government will not change the present system of corporate income tax.

"The most important proposal that was said ... yesterday was that the present system of corporate income tax ensures a transparent economy and the right motivation for employers to show their finances as they actually are. When there is a suspicion that (earnings) are somehow being taken elsewhere, this can definitely be solved. It makes no sense to abandon this system," Kitt said.

Asked about a proposal to lower the income tax on regular dividends from 20 per cent to 14 per cent, which Estonian daily Postimees said last week was among the ideas to be put forward by the workgroup to devise measures to promote economic growth, Kitt said the proposal was not under discussion.

The Swedbank manager said his message to the government-forming parties was that starting to levy income tax on the current profit of businesses is not a good idea.

Kitt emphasised at the meeting that it's essential to avoid differentiating the rate of income tax paid by individuals, whereas the basic exemption could be raised to leave more money in the hands of low income earners.

Kitt said the experts invited to offer their opinions to the parties holding coalition negotiations have no information about the conclusions made by the latter.

"The format was such. We made our recommendations and left --what was agreed, we don't know," Kitt said.

When it comes to the pension system, Kitt said his proposal was to make the system more flexible to enable people who wish to collect more money in their second pension pillar.

"Our pensions are small and this is so convenient a means of saving that many people use it. When payments (by the state) were frozen during the crisis, but you could continue making them on a voluntary basis, 200,000 people used that possibility, which is 10 times the number of people accumulating money voluntarily into the third pillar," Kitt said.

"The third thing we explored was capital markets. When municipalities or the state or a state-owned company needs money, it can be obtained either by borrowing from a bank or via the local securities market, which would enable people to place their deposits made in Estonia back in Estonia for a small interest if not else. Probably pension funds would have enough interest in local assets," Kitt added.

As a fourth measure, Kitt named a possibility for the government to borrow money to invest in education or developing the road network. The present market situation favours borrowing, as interest rates are low and money can be borrowed at a fixed rate if one wishes to be sure that rates on the loan will not rise in the future, he said.


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Title Annotation:BUSINESS NEWS
Publication:The Baltic Times (Riga, Latvia)
Geographic Code:4EXES
Date:Nov 17, 2016
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