Estonia ranks first in International Tax Competitiveness Index

Estonia has secured the top position in the Tax Foundation’s International Tax Competitiveness Index for the 13th consecutive year. The country’s success is attributed to a unique corporate taxation model implemented in 2000, which taxes profits only when they are distributed as dividends rather than when they are earned. This approach allows companies to reinvest retained earnings directly into their operations, acting as an accelerant for economic growth.

Key features of Estonia’s leading tax code include a flat tax system and the absence of double taxation on dividends. In the 2026 rankings of OECD member nations, Estonia maintained its first-place standing, while France ranked last. The United States showed significant improvement, moving from the bottom five in 2014 to the top half of the index.