News
Guide to doing business and
investing in Estonia
/ 01.09.09
PricewaterhouseCoopers welcomes the opportunity through this Guide
to provide relevant information for doing business and investing in
Estonia. Estonia is a small country located at the heart of the
Baltic Sea Region - Europe's fast growing market of more than 90
million people. Attractive location between East and West, an
excellent business environment, stable government and liberal
economic policy, moderate costs and the ease of doing business have
already attracted numerous international companies to Estonia.
Estonia was ranked 18th out of 181 countries in the Ease of Doing
Business index by The World Bank Group.
Estonian economy
Estonia's economy has experienced very strong growth in the last
three years: during that time economy has expanded by more than a
quarter in real terms and almost by two-thirds in nominal terms.
This has been achieved at the expense of taking very high risks. Now
some of these risks have materialized, bringing the economy into a
recession and uncertainties surround also growth expectations in
2009.
About Estonian legal system
Estonia has a continental European legal system. As in other such
civil legal systems, legislative acts are the most significant
sources of law, while doctrine, customary practice and precedent are
of secondary importance.
Labour market
At the end of the growth period, the economy reached the stage of
full employment and thus slower growth was inevitable. Since a large
part of the resources were employed, the labour market started to
hinder growth and strong wage pressures emerged. The opportunities
of working abroad caused additional pressures. In the years of rapid
growth in labour demand, the employment rate grew mainly on account
of those residents who would have had more difficulties in getting a
job if the demand for labour were lower (e.g. the retired). In 2008,
the share of the retired among the economically inactive started to
grow again.
Foreign trade overview
Proximity to the Nordic markets, location between Eastern and
Western Europe, competitive cost structure and high-skill labour
force have been the major Estonian comparative advantages since the
1990's. As a member of the European Union, Estonia today obviously
enjoys free trade within the Union, and full participation of
external trade agreements signed by the Union.
Taxation
Current Estonian Tax Legislation was mostly enacted during the first
phase of the transition reforms. The existing Law on Taxation came
into effect in 1994 and has since gone through several amendments.
Source: Estonian Chamber of Commerce and Industry.