The Estonian Parliament passed the Social Tax, Income Tax and other Acts Amendment Act On 15 June 2015.

The Act comes into force in stages. The first amendments come into force on 01.01.2016.

The main tax amendments

• The social tax rate will reduce. The social tax will be 32.5 % instead of the current 33 % from 01.01.2017 and 32 % from 01.01.2018.
• The foreign assignment daily allowance will increase. The tax exempt limit of the foreign assignment daily allowance is 50 euros for the first 15 days of the foreign assignment from 01.01.2016, however for 15 days in a calendar month at most and 32 euros for every following day.
• The tax exempt income of a resident natural person will increase. The tax exempt income is 2040 euros in 2016, i.e. 170 euros per month instead of the current 156 euros.
• In the following years the natural person’s tax exempt income will increase as follows:
  2160 euros in 2017;
  2280 euros 2018;
  2460 euros from 2019.
• The expenses deducted from the income of a resident natural person will decrease. According to the law in force, a natural person may deduct the housing loan interests, training expenses and charitable gifts and donations in the amount of 1920 euros per year from the income of the taxable period. From 01.01.2016 a natural person may deduct the aforementioned expenses from his income in the sum of 1200 euros.
• The accommodation service VAT will increase. From 01.01.2017 the VAT rate is 14 % of the taxable value of accommodation or accommodation with breakfast instead of the current 9 %.
• The expenses deducted as training expenses are reduced. Expenses paid for participating in driving school or expenses paid for an adult studying in hobby school are not considered as training expenses from 01.01.2016.
• The excise duty for alcohol, tobacco, electricity and fuel is increased. The excise duty increases planned for 1 January 2016 are postponed to 1 February in the case of alcohol and 1 June 2016 in the case of tobacco products. The alcohol excise duty rate will increase by 15 % and the tobacco excise duty rate by 8 %. The excise duty rate of petrols is increased by 10 % over the following three years; the excise duty rate of diesel fuel by 14 % in 2016 and 10 % during 2017-2018.