The best tax system for 5 years

USA based agency Tax Foundation published new list of countries depending on their tax system: International Tax Competitiveness Index Ranking. Estonia is the first in the list for 5 consequtive years.

It is the profit tax system on the first place, when tax is paid only after dividends were paid to shareholders. Thus it is not a company income to be prior to taxation but the payout to beneficiaries.

Second, there is no classical real-estate tax in Estonia, but a land tax to be withhold. And it does not depend on property value.

What about weak sides of Estonia it is the high rate of consumption taxes (VAT in this case). Though it is ovarall European the same – normally VAT is higher than sale tax used in other contries. In any case it was a good move for Estonia to increase level of turnover for obligatory tax payer registration from 16 000 to 40 000 euro per year.

Tax Foundation ranking takes two aspects on the first place: competitivenes and neutrality – both support economic growth and in the same time provide state budget with resources.

Latvia introduced this year the tax system similar to Estonia and got to 2nd position it the ranking. New Zealand is 3rd.