The Chamber's active role in representing the interests of the members
According to the statutes, one of the most important goals of the Chamber is to represent the interests of its members in shaping Estonian economic policy and to participate in submitting proposals to improve legislation.
In 2022, we processed more than 7,000 pages of legislation-related material and submitted 191 written opinions on drafts, development intentions, action plans and other documents to ministries, the Parliament of Estonia and other state institutions. In addition, we made proposals to amend and supplement existing legislation. Chamber representatives also participated in various working groups. In addition, we went through the most important legal changes aimed at companies and provided information on the imposed sanctions.
An overview of the most important activities and topics of 2022
- We proposed to the government to create temporary support measures for companies to compensate for high electricity prices
- Chamber's work victory: the universal electricity service can also be used by small business tenants
- Work victory: the employer's obligations related to remote work are more clearly stated in the law
- The employer has new occupational health obligations
- 2 work victories related to foreign labour
- The regulation of fixed-term employment contracts must be made even more flexible
- Rules of on-call hours became more flexible
- Distinctions for employees with independent decision-making competence came into force
- We launched the "Healthy Employee Initiative"
- We proposed to the government to temporarily expand the area of use of diesel carrying a fiscal marker
- Chamber's work victory: donations made to help Ukraine will also be tax-free in 2023
- We opposed the introduction of a new pollution tax
- Commercial register data is freely available to everyone
- We proposed raising the tax-free limit of the personal car allowance
- We sent the Ministry of Finance important principles that must be defended in the negotiations of the minimum corporate income tax directive
- The state acted in bad faith towards business partners
- We opposed limiting the reduction of income tax liability on loan payments
- At the Chamber's proposal, the employer's obligation to equip a remote work workplace was not included in the law
- We stood up for the interests of packaging companies in the development of amendments to the Packaging Act
- We drew attention to a number of problems related to the European Commission's initiative on the sustainable management of companies
- When diagnosing an occupational disease, the occupational health doctor must also communicate with the employer
- In the form of the Whistle Blower´s Protection Act, it is over-regulation
- We opposed two unreasonable proposals for stricter consumer rights
- Large companies also need supportive measures in the energy crisis
- Entrepreneurs continue to wait for solutions to critical problems in the field of education
- The European Commission's plan to limit the emission of greenhouse gases may turn out to be too ambitious for companies
- In spring, we sent an appeal to the government to ensure the availability of natural resources
- The Chamber proposed to suspend the procedure for amendments to the Language Act
- Estonia has taken on LULUCF, i.e., excessive responsibilities in the field of land use, land use change and forestry
- The unfair procedure for paying sickness benefits to pregnant employees must change
- Corporate lawyers should not be required to pass a mandatory law exam
- We wanted to know how far the country has come with the revision of the state budget
- We made several proposals to amend the draft law on foreign investment credibility assessment
- The main contractor's responsibility in the field of construction became smaller than planned at the Chamber's proposal
- Dealing with the problem of phantom mergers is commendable, but there is also a lot of ambiguity in the draft
- We proposed to ease the conditions of the support measure for the connection of renewable electricity production equipment
- The proposal for a directive on distance contracts for financial services contained several unreasonable requirements
- We published our views on the idea of creating a positive credit record
- The Chamber does not consider it essential to establish a unit for out-of-court settlement of financial disputes
- The rules related to the entrepreneur account must be updated
- Chamber's work victory: the obligation to report the first distribution of first risk category medical devices was not fulfilled
- We submitted several proposals to amend the draft related to continuing education
- The new energy efficiency directive sets ambitious goals for the energy efficiency of buildings
We proposed to the government to create temporary support measures for companies to compensate for high electricity prices
In December, together with 20 business organizations, we approached the government with a proposal to create temporary support measures for Estonian companies to compensate for high electricity prices. We sent four proposals to the government: to temporarily exempt companies from paying the electricity grid fee, to exempt companies from the renewable energy fee, to compensate companies for part of the electricity price exceeding the price ceiling, to extend universal service to all companies. Supporting businesses is essential, as many other member states have offered and will continue to offer support measures for businesses to cope with high electricity prices. If Estonia does not do this, the competitiveness of local companies on the export market, especially the processing industry, will weaken.
Chamber's work victory: the universal electricity service can also be used by small business tenants
Amendments to the Electricity Market Act entered into force on October 23, 2022, according to which micro and small enterprises have the opportunity to purchase electricity as a universal service until the end of 2023. At the proposal of the Chamber, the principle was added to the law that landlords who rent real estate to micro and small businesses can also offer universal service to micro and small businesses. The initial version of the draft did not foresee such possibility. During the development of the draft, the Chamber proposed to allow medium-sized enterprises and large enterprises to use the universal service, but this proposal was not taken into account.
Work victory: the employer's obligations related to remote work are more clearly stated in the law
Since the conditions of the remote workplace are mostly out of the employer's control, it is not reasonable to demand from the employer that the same rules must be followed in the case of remote work as in the case of working at the workplace. At the end of 2020, we proposed to the Ministry of Social Affairs that the law should specifically state what obligations the employer must fulfil in case of remote work. The Chamber's proposal was taken into account, and the corresponding amendments to the Occupational Health and Safety Act entered into force on November 19, 2022. The employer now has six main obligations in the case of remote work: reflect the possible risks related to remote work in the risk analysis and implement measures to mitigate the risks, instruct the employee before allowing him/her to work remotely, guarantee adequate tools for the performance of work tasks, organize the health check of the employee, investigate work accidents and occupational diseases and pay sickness benefits. The employer must fulfil other occupational health and safety obligations only if it is possible considering the specifics of remote work.
The employer has new occupational health obligations
Amendments to the Occupational Health and Safety Act entered into force on January 1, 2023, which impose additional obligations on the employer in relation to occupational health. If previously the employer had the obligation to send the employee for a health check in certain cases, then in the future the employer must order an occupational health service from an occupational health doctor, which includes, in addition to arranging the health check of employees, a comprehensive analysis of the occupational health situation and advice from an occupational health doctor on issues of improving the work environment and promoting the health of employees. According to the Chamber, contributing to the health of the employees is very important, but the proposed solution may not bring practical benefits. For example, it is questionable whether an occupational health doctor arriving at a company for the first time and staying for a relatively short time is able to make a comprehensive analysis or advise employees and employers based on the special characteristics of a particular company. As another problem, we see that the availability of occupational health services may decrease.
In order to reduce the burden on employers and occupational health doctors, we sent several proposals to the state to make the procedure for providing occupational health services more flexible. For example, we proposed to change the law so that in certain cases the employer could send the employee to have the health check at the employee's family doctor. This proposal was not taken into account.
2 work victories related to foreign labour
In previous years, we have repeatedly proposed to the state to exempt from the immigration quota foreigners who are paid at least 1.5 times the average Estonian salary. The corresponding amendment entered into force in the Aliens Act on May 24, 2022. In addition, on January 1, 2023, the Chamber's proposal to allow foreigners who want to work in Estonia for a few years to apply for a residence permit outside the quota also became law. From now on, foreigners can apply for a residence permit intended for short-term work for a maximum of two years, which does not go under the immigration quota. One of the conditions for obtaining this residence permit is that the foreigner must have worked in Estonia on the basis of short-term employment registration for at least nine months immediately before applying for the residence permit. We have proposed to exempt engineers from the immigration quota, but this proposal has not been taken into account.
We launched the "Healthy Employee Initiative"
In December 2022, together with 16 NGOs and professional associations, we launched an initiative to save people's rapidly deteriorating mental and physical health. With the initiative, we want to update the national health promotion support rules so that employers can invest more in people. For example, the tax-free limit for health promotion expenses should be increased from the current 400 euros to 800 euros per year. In addition, the list of services that can be reimbursed by the employer within the tax-free limit should be expanded. The list could include, for example, vaccinations, health examinations, services related to evidence-based prevention and treatment prescribed by a mental health and health professional, and more broadly wellness services such as massage.
The regulation of fixed-term employment contracts must be made even more flexible
On December 24, 2022, an amendment to the Employment Contracts Act entered into force, which gives the employer the opportunity to conclude successive short-term employment contracts with a person registered as unemployed. The Chamber proposed to extend such opportunity to all employees, but it was not taken into account. In addition, our proposal to allow the employer and employee to enter into a fixed-term employment contract without a valid reason was not considered. We also proposed to change the law in such a way that employers and employees have more flexibility to agree on the extension of fixed-term employment contracts or to enter into contracts consecutively without the employment contract becoming indefinite. This proposal was also not approved.
The rules of on-call hours became more flexible
In March 2022, we proposed to the Ministry of Social Affairs and social partners to amend the Employment Contracts Act in such a way that certain employees, such as employees of a vital service provider, would be allowed to deviate from the limit of daily and weekly rest time when using on-call time. The Chamber's proposal was partially taken into account. On December 24, 2022, an amendment to the Employment Contracts Act entered into force with regard to employees whose job task is to ensure the consistent operation of information and communication technology services and infrastructure or information security. From now on, the employer is allowed to enter into an agreement with the above-mentioned employee that the daily and weekly rest time limit is not to be observed in the case of on-call hours. However, the law contains additional conditions that this agreement must meet. For example, the duration of on-call time in one month must not exceed 130 hours, and the employee must be guaranteed two weekends free from work and on-call time per month.
Distinctions for employees with independent decision-making competence came into force
In March 2022, we turned to the Ministry of Social Affairs and social partners with a proposal to add a provision to the Employment Contracts Act, which allows the employer to enter into an agreement with the employee that the employee can choose the working time that suits him/her the best and that the rules of work and rest time do not apply to him/her. The Chamber's proposal was taken into account, and the corresponding amendment entered into force in the Employment Contracts Act on December 24, 2022. The employer is now allowed to enter into an agreement with an employee with independent decision-making competence that the rules arising from the Employment Contracts Act regarding compensation for night work and work performed on public holidays, organization of working hours, on-call time, limitation of night work, daily and weekly rest and reduction of working hours do not apply to the employee. According to the law, an employee with independent decision-making competence is an employee who is free to organize his/her working time based on the nature of the work. Such employee should have a greater opportunity to organize working hours according to his/her wishes and needs.
We proposed to the government to temporarily expand the area of use of diesel fuel with fiscal marking
In August 2022, together with four organizations (Association of Construction Material Producers of Estonia, Estonian Chamber of Agriculture and Commerce, Estonian Food Industry Association and Estonian Oil Association), we proposed to the government to amend the Fiscal Marking of Liquid Fuel Act so that diesel fuel with fiscal marking could be used for heating and also in production for the next two heating seasons, i.e., until May 1, 2024. If the proposal were to be implemented, the excise duty on diesel fuel used for heating and stationary engines would be reduced from the current 37.2 cents to 2.1 cents per litre. The government did not consider our proposal.
Chamber's work victory: donations made to help Ukraine will also be tax-free in 2023
In March 2022, the Parliament of Estonia adopted an amendment to the Income Tax Act based on the proposal of the Chamber, which allowed legal entities to make tax-free donations for Ukraine until the end of 2022, if the donation is made to the following organizations: Estonian Refugee Assistance, MTÜ Mondo, Ukrainian Culture Centre, National Defence Promotion Foundation, Estonian Red Cross, Rescue Association and Tallinn Old Town Rotary Club. At the beginning of September, we approached the Ministry of Finance with a proposal to extend this exemption for at least another year. The Chamber's proposal was taken into account, and the special exemption from income tax for donations made to help Ukraine will be valid at least until the end of 2023.
We opposed the introduction of a new pollution charge
In the spring of 2022, the Ministry of the Environment came up with a proposal to oblige companies to pay a pollution charge of 750 euros per ton for non-recycled plastic packaging waste. The Chamber, along with eight business organizations, opposed this proposal because the introduction of the pollution charge increases the motivation to not to declare the amount of plastic packaging waste and thereby increases unfair competition, it is difficult to monitor the new tax, and the planned pollution charge is unreasonably high. We were heard and the Ministry gave up on introducing the new pollution charge.
Commercial register data is available to everyone free of charge
In previous years, the Chamber has repeatedly proposed to the ministries and the Parliament of Estonia to make the Commercial register data available to everyone free of charge. From October 1, 2022, the e-business register data will be available to everyone free of charge. Previously, only the information on the registration card was available for free. Free data enables companies to view the data of their partners or competitors more easily and more affordably, and to create new innovative services.
We proposed raising the tax-free limit of the personal car allowance
In September 2022, the Chamber proposed to the Ministry of Finance to raise the tax-free limit of the personal car allowance stipulated in the Income Tax Act from the current 335 euros to 479 euros in one month. The current tax-free limit is valid from September 1, 2014, and it no longer allows business trips to be reimbursed at the previous level, taking into account the recent very high inflation. The Ministry of Finance informed us at the end of September that the tax-free limit of the allowance for the use of a personal car should be changed, but at the moment it is not possible to make this change because there is no prior analysis.
We sent the Ministry of Finance important principles that must be defended in the negotiations of the minimum corporate income tax directive
At the end of 2021, the European Commission published a proposal for a directive according to which groups with sales revenues of at least 750 million euros will have to pay an annual income tax of at least 15 percent. Since today's corporate income tax system is one of the important cornerstones of the Estonian business environment and a clear international competitive advantage, we consider it very important that the proposal for the directive allows Estonia to maintain its’ current corporate income tax system to the maximum extent possible. Therefore, we sent to the Ministry of Finance a number of principles for which the Estonian state must stand strongly during the negotiations of the directive in the European Union. For example, we emphasized that the directive must not deviate from the international agreement prepared under the leadership of the OECD. In addition, we proposed to postpone the deadline for the enforcement of the directive, because it is not possible for member states to transpose extensive rules into national law in a very short time. The Ministry of Finance relied on the principles outlined by the Chamber during the negotiations.
The state acted in bad faith towards business partners
In October 2022, we turned to the government with indignation, because business confidence in the government was collapsing, as the promises made by the state were often not fulfilled or turned out to be fake. In the appeal, we announced that entrepreneurs are concerned about cases where the government and various public sector organizations have not acted in accordance with the principle of good faith towards entrepreneurs. Such cases include, for example, failure to make price changes in government procurements in conditions of exceptional inflation and related to the construction of an LNG terminal.
We opposed limiting the reduction of income tax liability on loan payments
In the summer of 2022, the European Commission came up with a plan according to which in the future it would be possible to reduce the income tax liability from loan payments by up to 85 percent, while currently income tax from loan payments can be fully deducted. The Commission justified its plan by wanting to eliminate the situation where companies take loans to finance their activities, rather than using equity, because income tax can be deducted from loan payments, but not from equity. The Chamber strongly opposed the Commission's plan, as it would make the acquisition of loan capital less favourable and would negatively affect the availability of capital and the companies' solvency. As a result of the change, the ability of companies to make investments may also decrease, for example investing in the green and digital revolution. At the end of 2022, it was not known whether and in what form the European Commission plans to proceed with this initiative.
At the Chamber's proposal, the employer's obligation to equip a remote work workplace was not included in the law
The Chamber opposed the proposal to include in the Occupational Health and Safety Act the principle that the employer must design and furnish the remote work workplace, unless the employer and employee have agreed otherwise. Our proposal was taken into account, and only point that the remote work workplace is furnished by agreement between the employee and the employer was added to the law. The corresponding change entered into force on November 19, 2022.
We stood for the interests of packaging companies in the development of amendments to the Packaging Act
At the proposal of the Chamber, the draft law on the amendment of the Waste Act, the Packaging Act and the Tobacco Act became more business-friendly, the main purpose of which is to prevent and reduce the use of single-use plastic products. For example, the draft initially stated that businesses must set a minimum price (50 cents) for some food packaging and beverage cups, and in addition, the draft stipulated certain requirements related to reusable packaging. These points have been excluded from the draft. The current version of the draft states that companies must reduce their consumption of single-use plastic food packaging and drink cups by 2026, but each company can decide how to meet this goal. At the suggestion of the Chamber, the point that the company must take sales packaging waste back from the waste stream has also been left out of the draft. At the same time, there are still some problems in the draft, and therefore in October 2022 we sent several amendment proposals to the Environment Committee of the Parliament of Estonia. For example, we proposed to give companies a deadline of at least 6 months when the draft comes into force to draw up an action plan to reduce the use of single-use plastic food packaging and drinking cups. In addition, we proposed to change the draft in such a way that for the first time the packaging company must submit data on the quantity of disposable plastic products in the packaging register for the year 2023, not 2022. At the end of 2022, it was not known whether the Parliament of Estonia would take the Chamber's proposals into account. The draft procedure will continue in 2023.
We drew attention to a number of problems related to the European Commission's initiative on the sustainable management of companies
The European Commission has come up with a proposal for a directive that imposes a number of new obligations on companies in relation to the sustainable management of companies and the fulfilment of human rights and environmental due diligence. Although the Chamber supports the objective of the directive proposal, we see several problems related to it. The biggest bottleneck is that the proposal imposes responsibility on the company in relation to the fulfilment of human rights and environmental due diligence of the company's business partner. In certain cases, this responsibility may even extend to a business partner's business partner or even further back the value chain. In certain cases, it is very difficult for a business to actually check whether its business partner or its business partner's business partner fulfils human rights and environmental due diligence obligations. The company may request confirmation of this from the business partner, but this does not guarantee that the business partner will actually comply with such due diligence. For example, if the company's business partner is located in Africa or Asia, it is very difficult for the company located in Estonia to actually check whether or not the business partner fulfils its due diligence. In addition, it is also difficult for the supervisory authority located in Estonia to control it.
When diagnosing an occupational disease, the occupational health doctor must also communicate with the employer
The Chamber proposed to the Ministry of Social Affairs to amend the Occupational Health and Safety Act in such a way that the occupational health doctor must also communicate with the employer when diagnosing an occupational disease. Our proposal was taken into account, and on November 19, 2022, the changes entered into force, according to which the occupational health doctor must talk to the employer when diagnosing an occupational disease and, if necessary, visit the work environment. Previously, the occupational health doctor could establish a causal connection between an occupational disease and the work environment only on the basis of documents and the employee's words.
In the form of the Whistle Blower´s Protection Act, it is over-regulation
In February 2022, the Chamber sent an opinion to the Legal Committee of the Parliament of Estonia regarding the draft Notifier Protection Act, also known as the Whistle Blower´s Protection Act. The main purpose of the draft is to provide protection against employment discrimination to people who report violations of the law that became known through their employment activities. In the letter sent to the Parliament of Estonia, we emphasized that the draft Whistle Blower´s Protection Act is not essential in Estonia, rather it is over-regulation, creating additional time and money costs for both companies and the public sector. Furthermore, it is questionable how much additional protection the draft offers to the whistle blowers. The draft procedure will continue in the Parliament of Estonia in 2023.
We opposed two unreasonable proposals to make consumer rights stricter
The European Commission has a plan to create a new guarantee related to durability alongside the statutory guarantee (2-year guarantee valid in the EU) and sales guarantee (additional guarantee offered by the manufacturer, e.g., a 5-year guarantee on a refrigerator. This is a sales guarantee of more than two years offered by the manufacturer for the durability of the product, during which the manufacturer is responsible to the consumer for repairing or replacing the product. According to the Chamber, the new type of guarantee does not make it easier for consumers to understand the guarantee, but instead makes it more difficult. In addition, the three guarantees would also lead to excessive confusion for businesses, who must be able to differentiate and explain to the consumer which guarantee has which conditions and how long they are valid. In addition, we opposed the change according to which, for all types of goods, the trader must inform the consumer of the repairability of the product by means of a classification or, if there is no repairability classification, provide the consumer with other relevant repair information (e.g., availability of spare parts and ordering procedure).
Large companies also need supportive measures in the energy crisis
During the year, the Chamber repeatedly informed the state that large companies also need support measures due to high energy prices. For example, when the European Commission presented proposals to alleviate high energy prices in September 2022, which included, among other things, the proposal that member states can implement regulated electricity prices for small and medium-sized companies until the end of 2023 without asking for state permission, we informed the Ministry of Economy and Communications that large companies also need support. We emphasized the same point of view in the development of the universal electric service draft for business consumers and in the appeal sent to the government in December about high electricity prices.
Entrepreneurs continue to wait for solutions to critical problems in the field of education
During the year, we repeatedly appealed to the Ministry of Education and Research to draw attention to the deficiencies in the field of education. We also made suggestions to solve the problems. For example, we proposed that at the high school level the division of the mathematics curriculum into so-called narrow and broad should be stopped, at the high school level a threshold should be set for the minimum level of the high school, the responsibility for ensuring quality basic education and its availability should move to the central government level, the integration of high schools and vocational education institutions should be encouraged, and between vocational education institutions and entrepreneurs there could be systematic cooperation. In addition, we pointed out that the current system, where most young people go to the high school after finishing secondary school and a minor part go to vocational school, is not sustainable. We also pointed out several problems related to the principle of inclusive education.
The European Commission's plan to limit the emission of greenhouse gases may turn out to be too ambitious for companies
In July 2022, the Chamber sent its views to the Ministry of the Environment regarding the European Commission's plan to limit the emission of F-gases and other substances that deplete the ozone layer in the European Union. For example, the commission has come up with an idea to phase out all equipment using fluorinated greenhouse gases with a global warming potential of more than 150. Such devices include, in particular, various cooling devices. We informed the Ministry that there are still a lot of such devices in Estonia, and it is not reasonable to quickly replace these devices. We made it clear that we do not support putting a price on fluorinated greenhouse gases. In addition, we drew attention to the fact that the impact assessment prepared by the commission does not sufficiently take into account the economic problems arising from the current geopolitical situation.
In spring, we sent an appeal to the government to ensure the availability of natural resources
In March 2022, together with 11 organizations, we sent an appeal to the government, in which we emphasized that since the availability of raw materials from Ukraine, Russia and Belarus, such as wood, metals, inputs used in agriculture, was reduced or blocked to Estonian companies due to the war in Ukraine and sanctions, the government must urgently decide how our companies could continue operating at the same scale and minimize the damage to the Estonian economy. In the letter, we also emphasized that in the short and long term, in order to reduce foreign dependence, it is important to promote the use of domestic bioresources both by supporting investments and easing restrictions.
The Chamber proposed to suspend the procedure for amendments to the Language Act
In November 2022, the Ministry of Education and Science announced a draft law amending the Language Act and the Public Transport Act, which provided for the introduction of stricter language requirements for foreign-language brands, audio advertising, persons working through a digital platform, and taxi drivers. For example, the draft imposed an obligation on the entrepreneur to translate into Estonian a brand on the building with a foreign language text, which contains the words hotel, cafe, bank, market, spa. The Chamber proposed to the Ministry to stop the draft procedure, because the problems that need to be solved are not sufficiently clearly stated in the explanatory letter, and the question remains unanswered as to why the changes included in the draft have been chosen to solve the problems. According to the Chamber, in the form of many changes, it is also over-regulation. In addition, the Chamber pointed out shortcomings in the impact analysis and other important violations related to the principles of good law-making. By the end of 2022, it was not known whether the Ministry would consider the Chamber's proposals.
Estonia has assumed overwhelming obligations in the field of LULUCF, i.e., land use, land use change and forestry
In October 2022, together with 10 organizations, we sent a public appeal to the government, where we drew attention to the fact that Estonia has taken on LULUCF obligations in the European Union, i.e., excessive responsibilities in the field of land use, land use change and forestry. Estonia must sequester 2.5 million tons of carbon in the field of land use and forestry by 2030. The Ministry of the Environment has estimated that in the forest sector alone, the result of fulfilling the obligation will result in the loss of 14,000 jobs mainly in rural areas, a decrease in tax revenue by 80 million euros per year and a drop in GDP by 2.5 percent. With our appeal, we asked the government for a concrete plan and action plan on how Estonia will cope with these effects. We received an answer from the Ministry of the Environment that the Ministry is compiling an overview of possible activities and measures, but it will not be completed until 2023.
The unfair procedure for paying sickness benefits to pregnant employees must change
In December 2022, the Chamber proposed to the Ministry of Finance and the Ministry of Social Affairs to amend the legislation in such a way that a pregnant employee would not be deprived of the compensation paid by the health insurance fund if the employer pays additional sickness compensation, and that the additional compensation paid to the pregnant employee would be for the employer exempt from social tax. The same principle applies today to employees on sick leave who are not pregnant. At the end of 2022, it was not known whether the Chamber's proposal would become law.
Corporate lawyers should not be required to pass a mandatory law exam
In March 2022, the Ministry of Justice came up with a plan to establish the obligation to take a paid law exam also for lawyers who represent companies and institutions in court proceedings and are not advocates. The Chamber was against such mandatory law exam requirement. The obligation to take a paid exam is not proportionate, because in-house corporate lawyers are generally rarely involved in litigation, and a person who doesn’t take the exam may lose his/her job. In addition, as a negative impact on companies, this intention leads to the need to make unnecessary additional expenses when employees have to be replaced or legal services are purchased more expensively. At the end of 2022, it was not known how the Ministry planned to proceed with this idea.
We wanted to know how far the country has come with the revision of the state budget
The expenses of the state budget have increased significantly in recent years, but there is no certainty whether the taxpayer's money is still used as efficiently as possible and whether all expenses are essential to achieve the important goals of the state. Therefore, in January 2022, we turned to the Ministry of Finance to get information on how far the country has come with the revision of the state budget. We received a response from the Ministry that the implementation of the budget review principles is part of the government's comprehensive and sustainable approach to state finances and the implementation of an activity-based state budget.
We made several proposals to amend the draft law on foreign investment credibility assessment
The Economic Committee of the Parliament of Estonia is discussing a draft according to which a foreign investor from a third country must apply for a permit from the Consumer Protection and Technical Supervision Board if he/she wants to complete a foreign investment in a strategic field in Estonia. The Chamber is not opposed to this draft and understands the state's desire to create a system for evaluating foreign investments to ensure Estonia's security, but we still see the need to make several changes to the draft. For example, we proposed to include specific provisions in the draft to ensure legal clarity under which conditions the state is allowed to revoke a foreign investment permit. The draft procedure will continue in the Parliament of Estonia in 2023.
The main contractor's responsibility in the field of construction became smaller than planned at the Chamber's proposal
On October 15, 2022, an amendment to the Employment Contracts Act entered into force, according to which a contractor in the field of construction is obliged to pay salary to his subcontractor's employees if certain conditions are met. At the Chamber's proposal, a section was added to the law, according to which the change only applies to contracts concluded between the subcontractor and the employee's employer after October 15, 2022. In addition, the Chamber's proposal to establish more clearly in the law in which cases the contractor is released from the obligation to pay salaries to his subcontractor's employee was taken into account. The principle was added to the law, according to which the contractor is released from these obligations if he has checked the background of his subcontractor and considered him to be reasonably reliable, which is manifested primarily in the absence of payment disorders and the payment of social tax for employees.
Dealing with the problem of phantom mergers is commendable, but there is also a lot of ambiguity in the draft
In October 2022, the Chamber submitted an opinion to the Economic Committee of the Parliament of Estonia on the planned amendments to the Electricity Market Act, which mainly deal with the problem of so-called phantom connections, i.e., the situation where producers create the technical capacity to produce electricity and transmit it to the grid, but in reality, do not do it. As a result, the development of the electricity network and the addition of new electricity producers to the network has been significantly hindered. The Chamber informed the Finance Committee that it considers the handling of the problem of phantom mergers to be correct, but made several changes to the draft. For example, we proposed that the deposit to be paid when signing the subscription contract could be less than the rate stipulated in the draft. At the moment, it is not known whether the Parliament of Estonia will take the Chamber's proposals into account. The draft procedure will continue in 2023.
We proposed to ease the conditions of the support measure for the connection of renewable electricity production equipment
In August 2022, the Ministry of Economy and Communications came up with a draft regulation that allows a company to apply for support for the connection of renewable electricity production equipment to the distribution or main grid in industrial areas and the area adjacent to it. The initial version of the draft stated that the production capacity of the renewable electricity production unit connected to the main or distribution grid with the help of support must be at least one megawatt. The Chamber informed the ministry that the one-megawatt requirement is unreasonably strict and would limit the receipt of support. We proposed that the generation capacity should be 200 kilowatts instead of one megawatt. The Ministry took our proposal into consideration. The corresponding support measure was opened at the end of 2022.
The proposal for a directive on distance contracts of financial services contained several unreasonable requirements
The European Commission presented a proposal for a directive that establishes stricter rules of consumer protection for distance contracts of financial services. According to the Chamber, some of the new requirements are unreasonable, because they involve over-regulation, increase business costs and it is questionable whether the planned changes will have a positive effect on consumers at all. For example, we opposed the requirement that the financial service provider must provide pre-contractual information to the consumer at least one day before concluding the contract in the case of a distance contract of financial service. Such change reduces the speed and smoothness of the provision of financial services and may not be in the interest of consumers.
We published our views on the idea of creating a positive credit record
In the summer of 2022, the Ministry of Finance came up with the intention of developing a draft on the sharing of credit information, the purpose of which is to create a positive credit register in Estonia. It would be a database or a data exchange platform through which credit providers must exchange information about the existing financial obligations of private individuals. The Chamber informed the Ministry that the problem of over-borrowing must be dealt with, but before drafting the bill, a comprehensive impact analysis must be carried out. First, more precise information would be needed on whether the creation of a register would still be the best solution to the problem of over-borrowing. In addition, the costs involved in creating a database or data exchange platform should be further analysed. If the Ministry considers that the best way to solve the problem of over- borrowing is to create a positive credit register, the Chamber's first preference is to do this through the creation of a national data sharing platform.
The Chamber does not consider it essential to establish a unit for out-of-court settlement of financial disputes
In June 2022, the Ministry of Finance came up with a draft to create a unit for out-of-court settlement of disputes related to financial services at the Financial Inspectorate, which both private individuals and clients of financial services who are legal entities could turn to in order to resolve a dispute with a financial service provider. According to the draft, the resolution of the new unit is legally binding for the parties, i.e., enforceable in enforcement proceedings. The Chamber informed the Ministry that the creation of a unit for out-of-court settlement of financial disputes is not essential, as it is already possible today to resolve financial disputes between entrepreneurs both in court, in arbitration and within the framework of conciliation proceedings.
The rules related to the entrepreneur account must be updated
In November 2022, the Ministry of Finance came up with the intention to develop amendments to the Simplified Business Income Taxation Act, which includes several proposals to simplify the regulation of the entrepreneur account. The Chamber supports the implementation of several innovations. For example, we consider the removal of the higher tax rate positive and consider it necessary to give the company the opportunity to check the existence of an entrepreneur account. At the same time, we asked the Ministry to analyse in more detail the planned change, according to which a company does not have to pay income tax if a person provides services to the company through an entrepreneur account. In the case of such change, there is a risk that the employment relationship will be replaced by an apparent business through an entrepreneur account and thus unfair competition will arise.
Chamber's work victory: the obligation to report the first distribution of first risk category medical devices was not fulfilled
The draft law on the amendment of the Medical Device Act drawn up by the Ministry of Social Affairs originally required distributors of medical devices to inform the Health Board about the first distribution of medical devices belonging to risk class I, such as various patches and bandages, in Estonia. The Chamber proposed not to establish this obligation, because the risk of dangerous side effects is very small for these devices, and therefore there is no need for an obligation. Thanks to our proposal, the Ministry abandoned the introduction of the new notification obligation.
We submitted several proposals to amend the draft related to continuing education
In June 2022, the Ministry of Education and Science presented a draft on amending the Adult Education Act, which, among other things, provides for the evaluation of the quality of continuing education. The Chamber considers it very positive that the Ministry has renounced the previous idea of establishing the obligation to assess the quality of continuing education for any continuing education institution that offers education with state money. At the same time, we still believe that the most effective solution for assessing the quality of continuing education is the existence of a public and comparable feedback system, not a formal assessment of quality by officials.
The new energy efficiency directive sets ambitious goals for the energy efficiency of buildings
The European Commission has initiated a draft directive that deals with the topic of energy efficiency in buildings as part of the European Union's climate package "Objective 55". According to the draft, buildings built from 2030 must be zero-energy buildings, and the energy efficiency of existing buildings with lower energy efficiency must also be increased. The Chamber has a positive attitude towards the initiative, but proposed to carry out an impact analysis that would show what costs society should take into account and whether incurring such costs by the deadlines set in the draft is possible and does not lead to overheating of the construction market. If, according to the impact analysis, this does not prove to be reasonably possible, in the Chamber's opinion, the deadlines set in the draft should be postponed.
Lawyers advised 185 companies
Chamber members actively used the services of our lawyers in 2022. Lawyers advised members in all the most important areas that companies encounter in their daily activities (e.g., contracts, labour law, public procurement). Consultations related to contracts continued to be of great interest to entrepreneurs. We helped companies prepare different types of contracts (mainly sales and employment contracts), introduce contract changes and performed contract analyses.