Expenses incurred in the ordinary course of business operations.
Income Tax Act (ITA) § 17
Employee Salaries
Salaries and wages paid to employees for services rendered.
ITA § 17
Marketing Expenses
Costs associated with advertising, promotion, and marketing activities.
ITA § 17
Rent and Utilities
Payments for office space, utilities, and other facilities.
ITA § 17
Travel Expenses
Costs related to business-related travel, including transportation and lodging.
ITA § 17
Depreciation
Amortization of the cost of tangible assets used in the business.
ITA § 17
Interest Expenses
Interest payments on business loans or financing arrangements.
ITA § 17
Professional Services Fees
Payments to consultants, lawyers, accountants, and other professional services providers.
ITA § 17
Non-Deductible Business Expenses
Nature of Expense
Rationale for Exclusion
Legal References
Fines and Penalties
Penalties imposed for violations of law or regulations.
ITA § 17
Personal Expenses
Costs incurred for personal benefit rather than business purposes.
ITA § 17
Political Contributions
Donations made to political parties or candidates.
ITA § 17
Gifts and Entertainment
Expenditures for gifts, meals, and entertainment not directly related to business activities.
ITA § 17
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Expenses with Limitations
Nature of Expense
Limitations
Legal References
Meal and Entertainment Costs
Deductible up to 50% of the actual expense.
ITA § 17
Vehicle Expenses
Limitations on deductible vehicle expenses based on actual usage for business purposes.
ITA § 17
Home Office Expenses
Deductible portion based on the percentage of home space used for business.
ITA § 17
The treatment of deductible and non-deductible expenses, as well as limitations on deductions, is governed by the Estonian Income Tax Act (ITA). Specifically, Section 17 of the ITA outlines the types of expenses that are deductible for business purposes and any limitations or exclusions that apply.
The objective of allowing deductions for certain business expenses is to ensure that taxable income accurately reflects the costs incurred in generating revenue, thereby promoting fairness and efficiency in the tax system. Conversely, non-deductible expenses are typically excluded due to their personal nature or because they do not directly contribute to business activities. Limitations on deductions are imposed to prevent abuse or excessive claims for certain types of expenses.
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