Estonia's taxation system attracts fast-growing companies

"Estonia has the best laws, very good banks, cheap bookkeeping services and less bureaucracy than, for instance, in Germany or Lithuania. But the most important thing is that Estonia does not tax profits," says Nerijus Strumila, board member of Lithuanian-owned Euroalliance that is registered in Estonia.

The Lithuanian family-owned business that is registered in Estonia sells scrap metal and trades goods abroad, mostly operating in Germany, US, Lithuania and elsewhere in the EU. It is also a textbook example of foreign businessmen whose markets are outside Estonia, but who decide to incorporate the company in Estonia for tax reasons, writes Äripäev.

Euroalliance was founded in 2005 and is 100% owned by Antaninan Strumiliene, mother of Nerijus Strumila. The company made a profit of 70 million kroons at sales of 160 million kroons in 2008 putting its owner on 218th place in the Äripäev list of Estonia's richest businessmen.

Another company that is incorporated in Estonia, but operates in 23 countries abroad, mainly in Poland, is oil trading firm E100 Baltia. "Estonia has created a very good legal framework for companies and has a good business environment," says the company's owner, Belarus businessman Denis Bokhan, who is Estonia's 77th richest businessman.

E100 Baltia is Estonia's fastest-growing company. It was founded in 2005 and in 2009 increased its revenues from 250 million kroons to 957 million kroons. 2009 profit was 63 million kroons.

Tax expert Lasse Lehis says that one of the main reasons why foreign businessmen like to set up companies in Estonia is that such companies do not have to pay income tax on profits unless the profit is paid out as dividends.

"Estonia is definitely not a tax haven," emphasises Lehis, adding that the information in the Estonian commercial register is public and foreign tax authorities can obtain information from the Estonian tax service to check whether the operations of their businessmen are legal. "Such transition of companies into Estonia is also helping Estonia to collect state duties and is boosting sales of providers of accounting services, for instance," he added.

There are also plenty of critics. One of them is Viktor Trasberg, lecturer of economics of the Tartu University. "In the last decade, the Estonian state has failed to collect about 50 billion kroons in income tax," says Trasberg.

Source: balticbusinessnews.com

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Estonian Inflation Accelerates to Highest Rate in 20 Months on Food, Fuel

Estonian inflation accelerated in September to the fastest pace in 20 months, mainly because of rising food and heating prices.

Consumer prices rose 4 percent from a year earlier, the biggest jump since January 2009, compared with 2.9 percent in August, the Tallinn-based statistics office said today on its website. The median estimate of three analysts surveyed by Bloomberg was 3.5 percent. Prices rose 0.8 percent on the month.

Inflation expectations in the Baltic nation of 1.3 million people are rising because of increasing food and fuel costs and concern that adopting the euro in January will boost prices. The central bank is trying to protect Estonia’s economic recovery after inflation accelerated to 10.6 percent in 2008, choking off domestic demand and contributing to the European Union’s second- deepest recession during the global financial crisis.

“While there are mainly external factors, such as energy and food inflation, behind the faster price rise, it is becoming increasingly evident that problems with competition have become serious,” said Maris Lauri, the chief economist at Swedbank AB in Tallinn, in an e-mail. “Price increases are certainly not due to too-lax monetary or budget policies. The government and responsible authorities should significantly intensify efforts to support competition.”

By Ott Ummelas - bloomberg.com

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Tallinn, Estonia: a cultural guide

While some cities are best enjoyed on hot summer days – Siena, say, or Carcassonne – others come into their own in the cold. Tallinn, the diminutive capital of Estonia, begs to be explored when there’s a nip in the air or, even better, when its narrow medieval buildings and cobbled streets are shrouded under a blanket of snow. Ancient merchants’ houses and cellars, home now to candle-lit and fire-warmed cafés and restaurants, lure visitors indoors to indulge in hot chocolate, spiced wine and hearty borsch. Better still, the cruise ships that ply the Baltic set sail for warmer climes come autumn, no longer disgorging their passengers into Tallinn’s bijou Old Town.

In fact, a common complaint from Tallinn's cruise-borne visitors is that insufficient time is set aside to explore the city. One could quickly enjoy the sweeping views from Toompea Hill, dash around the medieval city walls, admire the beautiful Gothic town hall, and pop into the churches and monasteries that pepper the Old Town, but this would do it a great injustice. As one Tallinner said to me: "I've lived here most of my life but it's still growing on me."

First things first: book a certified guide for a couple of hours to show you the Old Town. Both Laura Taul and Anna Gvozdeva speak excellent English, and know the city and its turbulent history inside out (book through www.tourism.tallinn.ee)

Then marvel at the beautifully restored medieval homes, guildhalls and churches (notably the building now housing the Museum of Medieval Torture Instruments, the House of the Brotherhood of Blackheads and the Church of the Holy Spirit). Carry a stash of small change (Estonian kroons or euros), as entry to churches costs about EEK20 or €1.

Dip into the craft shops, too, which sell linen and leather goods, woollen clothing and ornaments and implements carved from juniper wood. Pick of the bunch are the St Catherine's Guild shops on St Catherine's Passage, and the Lühikese Jala Gallery and Hindricus on Lühike Jalg up to Toompea Hill.

Tallinn boasts a café culture to rival Vienna and claims to have invented marzipan. Master chocolatier Peter runs Chocolaterie Pierre and neighbouring café Josephine on Vene Street – the former is quaint and frilly, with irresistible handmade truffles, the latter is more contemporary, known for its fabulous hot chocolate. The Tallinn City Theatre café is the place to join performers on a break.

Finally, take time to visit Kadriorg – a large, forested park criss-crossed with paths and home to the Baroque Kadriorg Palace, the Presidential Palace and several museums. The cutting-edge design of the spectacular Kumu museum provides an almost refreshing change from the Old Town's crooked medieval houses and wobbly streets.

You can walk to Kadriorg in 20 minutes but save your legs for the park and museums, and get there on the number 1 or 3 tram from the Viru shopping centre just outside Old Town.

While some cities are best enjoyed on hot summer days – Siena, say, or Carcassonne – others come into their own in the cold. Tallinn, the diminutive capital of Estonia, begs to be explored when there's a nip in the air or, even better, when its narrow medieval buildings and cobbled streets are shrouded under a blanket of snow. Ancient merchants' houses and cellars, home now to candle-lit and fire-warmed cafés and restaurants, lure visitors indoors to indulge in hot chocolate, spiced wine and hearty borsch. Better still, the cruise ships that ply the Baltic set sail for warmer climes come autumn, no longer disgorging their passengers into Tallinn's bijou Old Town.

By Gabriella Le Breton - telegraph.co.uk

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