Tallinna Kaubamaja AS published a stock announcement on 25 August 2014, declaring that its subsidiaries are applying for a refund of advertisement tax paid from June 2011 to July 2014 in Tallinn, Tartu and Pärnu. Tartu Administrative Court rendered a judgement on the mentioned refund claim on 10 February 2015. While the claims have been accepted in Tallinn and Pärnu, the hearing times have not yet been determined.
On 10 February 2015, Tartu Administrative Court denied the claim of the subsidiaries of Tallinna Kaubamaja AS (Kaubamaja AS, Selver AS and Tartu Kaubamaja Kinnisvara OÜ), based on a decision of the Tartu City Government, which refused the refund of the advertisement tax paid from 1 June 2011 to 1 July 2014. The claim was filed on the grounds that the regulation of the advertising tax is inconsistent with the Constitution and the practice of the Supreme Court, which prescribe that all important elements of public financial obligations must be established by law. However, in the case of the advertisement tax, several important elements, such as the tax rate and the calculation basis thereof, had been left to be determined by the local government.
Tartu Administrative Court found that in case of local taxes, the determination of their important elements may be delegated to the local government, and that the provisions of the Constitution and Supreme Court practices referred to by the appellants apply to national taxes only. In this regard, the Administrative Court referred to the local government's right to make decisions on issues concerning local life independently.
Subsidiaries of Tallinna Kaubamaja AS intends to appeal the judgement, because as a result of the widespread practice of the Supreme Court, all important elements of public financial obligations must be determined on the legal level. As a local tax is also a public financial obligation, these requirements are valid for the advertisement tax as well. We are of the opinion that the autonomy principle of the local government cannot be considered to take precedence over the principle of the separation of powers and the concept of reservations, and from the perspective of a taxable person, there is no clear reason as to why local taxes collected by local governments should have less stringent requirements than those of other public financial obligations.
Tallinna Kaubamaja AS will continue to inform the stock exchange of any important court rulings and judgements on the court actions related to the refund claim in accordance with the procedure laid down in the rules and regulations of the stock exchange.
Raul Puusepp
Chairman of the Board
Phone: +372 731 5000