According to Alterna Partner Annika Vait, on July 1, 2019, Estonia enacted more than 25 legal acts, “changing the current legislation.”
One of the biggest of the changes likely to impact the business sector, Vait says, involves the submission of e-invoices to public entities. “The state wants to have one big system for getting invoices and came up with a technical solution to collect e-invoices through one system,” she says. The new system will require a period of adjustment for businesses, she says, but she says she believes the new system ultimately will help the country, describing it as “a good sign of Estonia being an innovative IT-state.” At this point, e-invoices are only applicable to the public sector, and invoices in the private sector continue to be in paper and digital formats.
Another result of the July 1st legislation flood is a 25% deduction of excise tax on alcohol, which Vait attributes to the lower prices for alcohol in neighboring Latvia. Since Estonia increased the excise tax of alcohol a few years ago, Estonians and some Finnish tourists turned to the shopping centers on the Latvian border for cheaper alcohol, she reports. “Because of this competition,” she smiles, “the government is trying to make the situation better and has reduced the tax.”
Vait sighs when asked about the major challenges in the country, referring to the results of the March 3, 2019, parliamentary elections that overshadowed the subsequent EU Parliamentary elections in May 2019. Although the liberal Reform Party won, Vait says that “the election went in an unexpected way,” as the Estonian Centre Party, Pro Partia Party, and Conservative People's Party of Estonia formed a coalition to establish a government. “This situation made business and intellectuals feel anxious,” she says, as, “Estonia has been promoted as an IT-innovative, internationally open, and stable environment for business, but the Conservative People's Party does not favor that idea, so the issue is how to maintain that image.”
Further, Vait says, Estonia's business law and insolvency law are currently being reviewed by two working groups at the Ministry of Justice. “The goal is to analyze the current situation and identify issues to address,” she says. As an example, the current business law does not protect minority shareholders’ rights enough, she says, hence various changes have been proposed with examples from other countries. However, Vait worries that the two laws will be only amended instead of being recreated wholesale. “Examinations do not actually mean that there will be any important changes,” she admits, adding that only adding new amendments to the acts is likely to make them more complicated. For instance, the Commercial Code was enacted almost 25 years ago, she says, and it was “amended so many times that it is hard to read it." As a result, she says, "it would be better if new acts were adopted so that everyone could easily understand them."