The Estonian Parliament (Riigikogu) on Thursday passed a government-initiated bill introducing a security tax. The law was adopted with 53 votes in favor and 27 against.
The legislation stipulates that Estonia will implement a security tax until the end of 2028 to generate additional tax revenue aimed at strengthening the country’s defense capabilities.
The tax consists of three components:
- An increase in the value-added tax (VAT) by two percentage points, effective from July 1, 2025.
- A two-percentage-point increase in the personal income tax rate.
- A two-percent corporate profit tax.
According to the Ministry of Finance, the additional budget revenue generated by this law is estimated to be:
- €113 million in 2025,
- €751 million in 2026,
- €784 million in 2027,
- €822 million in 2028.
The specific allocation and purpose of these funds will be detailed in the 2025 state budget and the national budget strategy for 2025–2028.
It is worth noting that earlier this summer, Lithuania’s Seimas voted to raise taxes to increase defense spending to 3% of GDP for the following year.
