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Tax behaviour ratings

E-service for tax behavior ratings – what is it and what is it for?

The tax behaviour ratings is a new e-service for businesses for obtaining information and ratings on their tax behaviour from the Estonian Tax and Customs Board (ETCB). The service gives business operators the assurance that their tax affairs are in order. The service is based on the analysis of the data businesses have submitted to the ETCB. The new e-service becomes available in the e-MTA during the first half of 2020.

Businesses submit data every month, but they do not receive any regular feedback from the tax authority as to whether those data are accurate or not. So far, most feedback information has reached a business through tax proceedings, which, by its nature, is burdensome and sometimes discouraging.

The e-service of tax behaviour ratings relies on the better transparency of the ETCB’s control activities and aims at building trust and cooperation between the tax authority and business operators. The tax behaviour ratings enable business operators to see themselves from the tax authority’s point of view. If there are any deficiencies in their tax data and/or behaviour, the business operators can immediately take action themselves and, by doing so, prevent tax controls.

It is also possible to prevent the ETCB’s controls by doing business with trustworthy partners. Business operators are expected to act with due care and consideration in choosing their transaction partners and to check their potential partners’ background before transactions. However, the reality is that such a background check is costly and therefore often omitted in practice. As a result, reliable businesses may unknowingly fall into the chain of tax fraud and, accordingly, be selected for a fiscal control, which may lead to an additional tax liability.

By means of the tax behaviour ratings, business operators can conduct background checks on their transaction partners quickly and easily in order to ensure that their partners’ tax affairs are in order. For this purpose, business operators can turn to their transaction partners to request access to the partners’ ratings information. If the transaction partner’s ratings are in order, there is more certainty when concluding transactions. Each business can share the ratings given by the ETCB as it wishes.

What kind of information can be found and who can see it?

The tax behaviour ratings include information on business operators who are registered in Estonia.

The service will bring together in one environment public data, the collection of which today would require several inquiries in the information systems of the ETCB.

The tax behaviour ratings make the following public general information on each business accessible to all:

  • information on the registration as a person liable to value added tax
  • existence of tax arrears
  • activity licences issued
  • customs authorisations issued
  • data for last four quarters regarding taxes paid, number of employees and turnover

In addition to public general information, two tax behaviour ratings will be calculated per business operator – the tax compliance rating and the assessment of tax affairs. The ratings are calculated based on the data protected by tax secrecy. Only business representatives can see these ratings and decide if they want to share their ratings, with whom and during which period.

Which opportunities does the new e-service offer?

Businesses have an overview of their data and see the ratings which have been calculated based on those data.

Businesses can share their data with others if they wish, and see the ratings of other businesses who have shared them. Likewise, businesses can compare themselves with others, for example on the basis of the number of employees or supplies.

How are the ratings formed?

The tax compliance rating and the assessment of tax affairs are formed based on a business operator’s tax behaviour.

The following aspects are taken into account:

  • whether declarations and returns are submitted and taxes and duties paid on time
  • whether there are any errors in tax returns and reports submitted
  • whether violations have been established in a business operator’s behaviour, notices of assessment have been issued or the operator has been punished for the violation of tax law
  • whether the background of the person responsible/board member is trustworthy
  • whether the background of the business operator’s transaction partner is trustworthy
  • whether there are any indications to the payment of concealed wages

A business operator can see ratings on the last 12 months.

Ratings are updated monthly or daily, depending on the content of the rating.