Obligations of a taxpayer using Estonian CIT

A number of obligations (including record-keeping) have been imposed on companies that have chosen to be taxed under Estonian CIT, which must be fulfilled during the period of using this taxation system.

Record-keeping obligations
Companies taxed under Estonian CIT are required to keep books of account and prepare financial statements under accounting regulations in a manner that ensures the correct determination of the amount of net profit (loss), the tax base and the amount of tax due.

In addition, taxpayers must ensure that the following are separated in equity:

  • the amount of undistributed profits and the amount of distributed profits that have been charged to capitals and were earned during the years of Estonian CIT taxation,
  • the amount of unabsorbed losses incurred in the years of Estonian CIT taxation.

The above separation must be made in the year of distribution of the aforementioned profits or coverage of the aforementioned losses.

Information obligations
The return on the amount of income earned for the previous tax year must be submitted by the end of the third month of the tax year. The form CIT-8E is used for this purpose. Shareholders of a taxpayer taxed with Estonian CIT are required to file annually a statement of entities in which they hold, directly or indirectly, at least 5% of shares / total rights and obligations in the capital (statement OSW-RD). However, this does not apply to entities with which the Estonian CIT taxpayer does not transact in any form.

The statement shall be submitted by the end of the first month of the taxpayer’s tax year, and in the case of a change in the facts – within 14 days from the date of the occurrence of such changes. At the request of the head of the tax office, the company is required to provide copies of the statements submitted by shareholders.