Sotsiaalmaksusid

Sotsiaalmaksusid is a type of tax system implemented in Estonia, which taxes distributed dividends and under-the-counter wages higher than the statutory minimum wage. This system aims to reduce income inequality and increase the government's revenue through taxing previously untaxed income.

The taxation is imposed on recipients of sotsiaalmaksusid, which includes shareholders who receive dividends above a certain threshold, as well as individuals who earn income under the table. The government taxes this income at a higher rate than regular income tax.

The introduction of sotsiaalmaksusid was a response to the need for additional revenue generation in Estonia, as well as a means to combat practices like under-reporting income and stock-price manipulation. The new taxation system has led to a more regulated economic environment, strengthened the oversight of tax authorities, and provided a more accurate picture of the country's GDP.

Under sotsiaalmaksusid, income above a certain threshold is taxed at the standard income tax rate and additional income tax, known as "supplementary income tax," is applied to income that exceeds a higher threshold. To address concerns about the system's simplicity and enforcement, tax authorities and the government have provided instructions and guidelines to facilitate compliance.

The legislation establishing sotsiaalmaksusid went into effect in 2018, with a gradual transition period for taxpayers and businesses. Reactions to the system have been mixed, with some arguing it simplifies tax compliance, while others see it as overly complex and burdensome for individuals and businesses alike. As with any significant change to a tax system, the sotsiaalmaksusid has been subject to ongoing evaluation and refinement to address issues and concerns that have arisen.