Estonia: Domestic Corporate Taxation
Scope of Income Tax
Corporate income tax in Estonia is only levied on distributed profits. The zero rate of tax on undistributed profits is aimed at encouraging businesses to reinvest profits. There is no tax on profit that is converted to share capital by way of a share issue. Businesses registered and with a base in Estonia will pay tax on revenue generated in Estonia and worldwide. Businesses trading in Estonia but whose main base is not in the country only pay tax on revenue generated within Estonia.
Employers are required to pay social tax for payments made to employees. For details see the section on Personal Taxation.