Taxation system of Estonia is very favorable for entrepreneurial activities. The country has long ago set the course for liberalization of this sector, due to this it considerably increased the inflow of investments in economy. Peculiarity of taxes is not low rate, but approach to its payment.
The main advantage of the taxation system of Estonia is absence of undistributed profit tax. It means that in case of distribution of dividends among shareholders the rate is 21%, and if profit remains on accounts or it is reinvested in the development of the company, payment of tax is not required.
Other taxes are paid by all entrepreneurs working in Estonia. VAT rate is 20% and social tax is 33%. Also there is a non-taxable minimum wage and it amounts to 170 euro. The level of minimum wage in Estonia is 430 euro gross, that is lower than in other European countries, and it allows hiring of highly qualified specialists.
Also it should be noted that Estonia concluded treaties on avoidance of double taxation with many countries. It makes international activities of a company more profitable, because it allows the avoidance of payment of certain taxes.