Today, on May 29, the Estonian government decided to support Foreign Minister Margus Tsahkna’s proposal to terminate the agreement between Estonia and Belarus on the avoidance of double taxation and the prevention of tax evasion.
“The termination of the Belarus double taxation avoidance agreement is a message that companies and residents of a country involved in an aggressive war will not receive tax benefits in Estonia,” said Tsahkna. “Since 2022, Belarus has been involved in Russia’s aggression against Ukraine, violating norms that are fundamental to international law. This kind of action must be resisted in every way. In addition to other measures, we will also do this through the termination of the bilateral double taxation agreement,” explained Tsahkna.
“Additionally, Belarus has unilaterally decided to suspend the application of key provisions of the tax agreement, although the agreement does not foresee such a suspension,” noted the foreign minister.
The aim of double taxation avoidance agreements is to encourage investments between the countries involved. To achieve this, the agreement limits the taxes that one party can impose on income earned in the other country. If the agreement is terminated, both countries will apply only their domestic laws, and income related to both Estonia and Belarus may be taxed in both countries.
“Considering the general number of taxpayers, the termination of the agreement will affect a relatively small group of people, primarily Belarusian residents who receive pensions from Estonia. There are very few Estonian companies still operating in Belarus,” Tsahkna noted.
The termination of the tax agreement will take effect at the beginning of the new calendar year, and at least six months’ notice is required. If the Riigikogu adopts the law in June and the President of the Republic proclaims it, Estonia will notify Belarus before the end of June, and the agreement will terminate on January 1, 2026.
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