Walless Tax Cookie: The new Estonian Government coalition promises to abolish the Defence Tax on corporates

The new Estonian Government coalition has agreed to abolish the defence tax on corporates. The initial plan was to introduce the 2% defence tax on the accounting profits of Estonian resident companies starting from 2026. This simplistic annual corporate income tax system was set to undermine Estonia’s unique corporate income tax system, which applies only to profit distributions.

But the plan to introduce the 2% defence tax on individual income is still intact. Considering that the rates of the Estonian corporate and individual income tax have over the years always been the same, it is a possibility that, while the defence tax on the corporate profits will be abolished, the corporate income tax rate will increase to 24% as well.