Estonian parliament to discuss termination of tax treaty with Belarus

TALLINN - The Riigikogu is set on Monday to hold the first reading of a government-initiated bill to terminate the agreement between Estonia and Belarus on the avoidance of double taxation and the prevention of tax evasion.

The agreement, in force since 1998, was intended to encourage investment between the two countries. However, Belarus has unilaterally violated the agreement by partially suspending its application to Estonian residents. After the agreement is terminated, income earned by residents of both countries will be taxed according to their respective national tax laws, without the protection normally provided by double taxation agreements.

"The termination of the double taxation agreement with Belarus sends a clear message that companies and citizens from a country participating in a war of aggression will not receive tax benefits in Estonia," Estonian Foreign Minister Margus Tsahkna said.

"Since 2022, Belarus has participated in Russia's war of aggression against Ukraine, thereby violating the fundamental norms of international law. Such actions must be opposed in every possible way. In addition to other measures, we are doing so by terminating the bilateral double taxation agreement," the minister said.

"Considering the overall number of taxpayers, the termination of the agreement affects a relatively small group of individuals, primarily Belarusian residents receiving pensions from Estonia. Very few Estonian companies still operate in Belarus today," he added.

The termination of the tax agreement takes effect at the beginning of the new calendar year and must be notified at least six months in advance. If the law is adopted by the Riigikogu and proclaimed by the president in June, Estonia will notify Belarus before the end of June and the agreement will expire on Jan. 1, 2026.