Estonia withholds support for OECD Pillar Two “side-by-side” package
Chris Danes · Posted on: December 17th 2025 · read
Estonia’s Ministry of Finance has said it did not agree (under an OECD Inclusive Framework “silent procedure”) to the proposed Pillar Two side-by-side system package, and that it wants an outcome “acceptable to all parties.”
In its announcement, Estonia argues that the OECD minimum tax rules are highly complex, would create a disproportionate administrative burden for businesses and the tax authority, and are unlikely to generate enough additional revenue to justify the costs, particularly in countries with few multinational headquarters.
The Finance Minister, Jürgen Ligi, also linked Estonia’s position to the fact that the United States has not implemented the approach it helped initiate, and emphasised the importance of avoiding measures that add bureaucracy without clear fiscal benefit.
Estonia currently benefits from an EU derogation that allows it to postpone Pillar Two implementation until 2030, and it has indicated it will seek to extend that flexibility.
Chris Danes, Corporate and International Tax Partner at MHA explains what this likely means:
"Estonia’s “no” is a warning light for Pillar Two: the hardest part isn’t the maths, it’s getting countries to agree. With other objections also reported in the press from China, Poland and the Czech Republic, the OECD is likely to face pressure in the coming weeks, against a year-end target, to deliver meaningful simplification and revisit key elements of the side-by-side package."
"If the side-by-side track stalls, the US could face renewed pressure to revive the proposed “revenge tax” (Section 899), which was previously dropped after the G7 understanding. The immediate impact is continued uncertainty, but not a pause in compliance for groups in countries where the rules are already in force."
Chris Danes, Corporate and International Tax Partner
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