From now on, the annual report will be thinner, but contains more data

Pursuant to the recently amended Accounting Act, most Estonian companies can now draw up annual reports, which are significantly thinner that the ones filed so far. For large companies, the new Accounting Act includes new requirements for information, which is not disclosed in the management report. Still, there are quite a few grey areas in the new Act – while the same accounting requirements have been applied to all companies so far, the picture is a lot fuzzier now and the Act must be read quite carefully to find the right clues. On the other hand, however, the Act makes the lives of microenterprises considerably easier.

Companies lined up by size

Based on the new act, it appears as if there is only one requirement for microenterprises – the balance sheet total. Thereat, it must be kept in mind that a microenterprise cannot be a VAT payer – the name applies to the companies that are not yet VAT payers. If a company actually is a non-VAT payer microenterprise, the owners of such companies can take care of the accounting of the company themselves. A more important fact here is that, based on the new Act, only microenterprises are permitted to only submit their annual reports.

From the perspective of determining the size of a company, the restriction UP TO is applied here, which means that only one criterion may be violated. If more than one criterion is violated, the company is of the next size group.

If, however, a company discovers in the year following the year in which the annual report was drawn up that the limits for their size group were exceeded, the company will move to the next category. On the other hand, the Act also prescribes that a company may only move to the next category in the third year after meeting the requirements.

Thinner annual reports do not mean less data

The new Act comes with a risk of the annual reports of microenterprises not being particularly informative, but it is also permitted to draw up an annual report based on the rules of a category of larger companies or the IFRS. On the other hand, it is not perhaps reasonable to take advantage of all new exemptions – while the full reports have also been used by Statistics Estonia so far, the companies will now have to start submitting separate reports to Statistics Estonia in the case of drawing up thinner annual reports.