The Finance Ministry is preparing to modify tax incentive rules for various NGOs in an attempt to revamp the current system, where some non-profits allegedly engage in commercial activity and avoid paying taxes.
Finance Minister Jürgen Ligi told ERR radio that currently some non-profits, foundations and religious institutions can work around the current laws to avoid paying taxes. Although the tax incentives list is constantly monitored and the NGOs are required to file annual reports, the ministry is considering additional safeguards.
Culture Minister Rein Lang gave an example: the theater R.A.A.A.M, known for using freelance actors and hosting plays in various locations across Estonia, had not filed tax returns for four years, but still received tax breaks. And many similar companies do not just serve the public interest but essentially compete for the theatergoers' money, Ligi said.
“Theaters serving public interest and culture with non-profitable activities will keep getting the benefits. But theater activities often have become more diverse and they are clearly profitable. In such situations, the tax benefits [system] must not support the theaters and their finances must come from the budget, not from legalized tax fraud,” added Ligi.
Amendments are being prepared, and many suggestions have come from the NGOs, said Ligi.