You have your own business and are about to sign your first big deals. There is no polite office yet and you meet your business partners in cafes/restaurants. You have reached an agreement, and as a token of thanks, you give your partner a gift.
Did you imagine something fancy?
And then the accountant happily announces that you can freely pay for your business partners' lunch at the restaurant for 32 euros. To clarify, this amount is for the whole month and for all business partners. You can freely buy a business gift for 10 euros.
Now you make quick proofreadings, in the future you will meet at the burger, because the partners came in a variety of ways, and you will take matches as a gift, which is offered in a wide range and is enough for everyone. It is a pity that the Viljandi match factory closed down.
These amounts were written into the law at the moment when the euro started arriving in Estonia, i.e. 12 years ago. Do you still remember which and various restaurants you could go to for 500 kroons or 32 euros?
It should not be news to anyone that the value of money decreases over time, and as life shows us, the value of money has changed many times during this time.
These amounts in this law create an inferiority complex in me as a tax consultant. Lately, I have told my clients, who are mainly still from outside Estonia, that it is non-existent. At the moment, it seems that I would make a more polite impression if I said that we do not have such a discount, but then they are amazed how it is, because in general, most of them have such discounts.
But now more seriously
It would be better if fixed amounts, especially such small ones, were not written into the income tax law. Such small amounts leave us with: firstly, the image of a very cheap country, which we no longer have for a long time, and secondly, they encourage us to buy "high-quality Chinese tea" instead of Estonian products.
Changing the law is a difficult enough process, even if you change just one number, and especially if there is no will. Therefore, linking it flexibly with an inspection obligation after a certain period of time, for example by the Ministry of Finance, or with some indicator (for example, inflation) would have a significantly better effect.
If the change of the income tax minimum and the like is done under the pressure of interest groups, then there are no interest groups for the above-mentioned amounts and they seem insignificant, and that is why they remain unchanged. The review of all the amounts in the income tax law could go together and in accordance with changes in the real standard of living, following the original principle for which the amounts were written into the law.
In addition to reputation, society would gain from giving away unnecessary things. A smaller quantity but higher quality gift is an added value in itself. Yes, of course you can also go to a restaurant for a larger amount if there are many employees and also buy gifts, paying additional taxes. But the main difference is in which direction you want to show.
Although matches are not necessary and when going to a lonely island it would be my first choice, what would you bring?. But with whom do I promote business there?
Grow does not sell matches, but we do offer tax advice and accounting. Feel free to contact us if it seems that we can help you. We will continue to solve the issues related to the reception of business partners as well as gifts.
Ulvi Tallo