Käibemust

Käibemust is an Estonian term that translates to "value-added tax" or VAT. It is a consumption tax placed on a product or service whenever value is added at each stage of the supply chain, from production to the point of sale. The amount of VAT the user pays is on the cost of the item, less any of the costs of materials used in the item that have already been taxed. The VAT system is designed so that the final consumer bears the burden of the tax.

In Estonia, käibemaks is a significant source of government revenue. The standard rate of käibemaks is 20%. However, there are reduced rates for certain goods and services, such as books, newspapers, and medical supplies, which are taxed at 9%. Some services, like financial services and certain healthcare services, are exempt from käibemaks altogether.

Businesses registered for käibemaks are required to collect it from their customers and remit it to the Estonian Tax and Customs Board. They can also deduct the käibemaks they have paid on their own purchases (input tax) from the käibemaks they have collected (output tax). This mechanism ensures that the tax is only levied on the value added at each stage.

The implementation and administration of käibemaks in Estonia are governed by the Value Added Tax Act. This legislation outlines the rules for registration, invoicing, tax returns, and compliance. International trade also involves specific rules regarding käibemaks, particularly concerning imports and exports, to avoid double taxation and ensure fair competition.