Estonia: New database fights undeclared work

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Changes to tax rules in Estonia have been introduced to tackle the problem of undeclared work.

In March 2014, Parliament approved changes to the Taxation Act which allowed for the creation of a database of employees. The aim is to address the issue of undeclared work and illegal ‘envelope wages’ in Estonia and to increase tax revenue.

According to the Ministry of Finance, the change has been a success. Between July and August, employers made payments to more than 5,400 people who previously had not received any official income for a year. This has brought in an additional €1.4 million in taxes.

A large number of the employees added in the database worked in the construction, retail, and food and drink sectors.

The database aims to reduce the administrative burden on employers and increase employees’ sense of security. Employees can now check the database to see if an employer has registered its employees. Checks can be made on whether an employer has paid taxes on an employee and what social grants an employee is entitled to

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