Estonia: Executive Summary

Estonia Executive Summary

Estonia is located in Eastern Europe, and has a land area of 45,000 sq km. The country borders the Baltic Sea and the Gulf of Finland, between Latvia to the south and Russia to the east. The population is around 1.3m. The official language is Estonian.

The President is usually elected for a five-year term, although a second term is permitted. Since October 2006, the role has been occupied by Toomas Ilves.

Estonia’s five major cargo ports – and Tallinn especially – are key players in trade in the Baltic Sea region, and in trade between Russia and Western Europe. Business sectors in Estonia include engineering, electronics, wood products, textiles, information technology and telecommunications.

GDP per head in 2009 was estimated at USD18,500, a steep decline on 2008 figures of USD21,400. Unemployment in 2009 more than doubled to 13.8% up from 5.7% in 2008. The currency is the Kroon (EEK), which is pegged to the Euro at EUR1 = EEK15.64664.

The corporate income tax rate is 21% on gross distributed profits and 21/79 on net dividends; this will reduce to 18% (18/82) by 2012. There is no corporate income tax on undistributed profits. Companies operating in the three Free Zones at Muuga Harbour (part of the Port of Tallinn), Sillamäe Port and Valga can benefit from tax and customs duty exemptions on goods imported, processed within those zones, and then exported from Estonia. Businesses can also benefit from a number of start-up and development grants available through Enterprise Estonia in conjunction with funding available through the EU.

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