On the 14th of December Laivi Laidroo introduced the results of a study carried out by a 15-member team from the Department of Economics and Finance and Business Administration.
The aim of the project was to identify the causes and consequences of non-submission and late submission of annual reports and to determine the most suitable and effective solutions that would motivate entrepreneurs to submit annual reports by the deadline. To achieve this aim an analysis of over 1.5 million observations was undertaken, Paavo Siimann and Mari Avarmaa managed 26 interviews with experts and Merle Küttim was in charge of a survey with more than 800 respondents.
The final report of more than 200 pages provides a thorough overview on the submission of annual reports during 2010-2018 by legal persons registered in Estonia. It also contains an overview of the consequences of untimely submission of annual reports, the causes for non-submission and late submission. The report provides an overview of the practices in the field in Finland, Belgium, Germany, and the UK as well as of the possible instruments/methods for improving the situation in Estonia.
The analysis shows that during the investigated period:
- Nearly a quarter of annual reports have not been submitted.
- Nearly 40% of all filed reports have been filed after the deadline and over half of the late-filers have been late by more than 71 days.
- Greater problems have been observed amongst legal persons that are younger, smaller, located in Tallinn, who have been non-filers and late-filers on earlier years, are not liable to value-added tax or have failed to pay taxes on time.
- Less than 1% of late-filers have received a fine warning or a fine.
In order to improve the situation, it is recommended to support timely submission of annual reports through preventive measures. These include the automatic reminders by e-mail, distribution of additional information about the importance of the process and deadlines through public and private sector representatives or social marketing campaign. In addition, it would be possible to pressure legal persons to submit their annual reports if they apply for financial aid provided by the state, submit a bid at a tender or want to get value-added tax refund. Still, compared to current practice, it would be important to improve the efficiency of punitive measures.
More details on the results of the study and recommendations are available in the summary of the report available here (in English).