ESTONIA AT GLANCEESTONIA – Excellent

Environment for Business

Aviation

Estonia by facts...

� one of the most sparsely populated countries in Europe (1.3 mil

per 45,000 sq. km)

� forest covering around 50% of the area

� sea boundary only four times shorter than that of China‘s

� lasting civilization for the past 10,000 years

...and in essence� member of the EU, NATO, OECD and WTO

� Fitch A+ (stable); S&P AA-(stable); Moody’s A1(stable)

� lowest public sector debt in Europe; national currency euro

� OECD High Income country: GDP per capita EUR 13,200

� gateway between East and West: 50 million consumers in thereach of 24 hours; 300 million consumers in the reach of 48hours

� has the biggest and deepest ice-free port of the Baltic Sea

� hosting the NATO Cyber Defence Centre and the EU IT Agency

� where WiFi is a human right

GDP growth and inflation, 2002-2012

7,87,1

7,59,2

10,2

7,1

-3,6

-14,1

3,1

8,3

3,2

-15

-10

-5

0

5

10

15

-15

-10

-5

0

5

10

15

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

gdp growth

inflation

Source: Statistics Estonia

According to OECD Economic Survey, strong recovery from the

crisis has benefited from structural strengths of the Estonian

economy:

� flexible labour force,

� business friendly regulation,

� well capitalised financial institutions,

� a successful transition from the currency board to euro area membership,

� and sustained credibility of fiscal policy

Recovery from economic crisis

Estonia is one of the most successful

countries in in the world in attracting FDI

Public Sector Budget Balance 2003-2016

1,7%

1,6% 1,6%

2,5% 2,4%

-2,9%

-2,0%

0,3%

1,1%

-0,3%

-0,5%

-0,1%

0,0%

1,0%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

-600,0

-500,0

-400,0

-300,0

-200,0

-100,0

,0

100,0

200,0

300,0

400,0

500,0

600,0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015* 2016*

% of GDPmln EUR

Central government Social Security Funds Local government General Government budget position (r.sc)

Lowest government debt in Europe

6,6

16

,2

18

,4

30

,8

38

38

,2

38

,5

39

,8

41

43

,6

44

,7

48

,4

55

60

,1

60

,8

62

,7

68

72

,3

80

80

80

,2

81

,7

83

,2

93

96

,2

96

,8

11

9

14

2,8

0

20

40

60

80

100

120

140

160

EE BG LU RO SI LT CZ SE SK DK LV FI PL ES CY NL MT AT EU-27

UK HU FR DE PT IE BE IT EL

General government debt percentage of GDP 2010

Source: Eurostat

…6,1% of GDP in 2011

Easy to do business –

World class trading location� Estonia is consistently ranked by

IMD, World Bank and the World

Economic Forum as one of the

easiest and most efficient places

to do business in the world

� Estonia is Ranked 7th out of 185

economies for the ease of Trading

Across Borders.

� Factors benchmarked:

� number of all documents required

to export/import goods,

� time necessary to comply with all

procedures required to

export/import goods, and

� cost associated with all the

procedures required to

export/import goods

Source: World Bank – Doing Business 2013http://www.doingbusiness.org/economyrankings/?direction=Asc&sort=9

6 7 813 14 16

24

50

6873

0

10

20

30

40

50

60

70

80

Trading Across Borders ranking, 2013

High position in business environment rankings

1

9 1013 14

16

19 1922

24

29

48

5557

Index of economic freedomrankings 2013

Source: World Economic ForumSource: Wall Street Journal; The Heritage Foundation

13 4

6 7 8

34

3941

45

55

Global competitiveness index 2012

High e-readiness and low corruption

Source: World Economic ForumSource: Transparency International

13

810

1618

24

31

41 42 43

49

Networked readiness index rankings 2012

14

13

17 17

19

32

41

4648

54 54Corruption perception index

rankings 2012

Estonia has the greatest internet freedom in the world.According to Freedom House

Low risk –politically and economically stable

� Political stability. Estonia is seen asthe most stable country in CEE – morestable than Czech Republic, Poland,Lithuania, Romania or Hungary.

� Estonia was ranked in joint second

place in the 2010 ranking of Europeancountries by the European EconomicSustainability Index (EESI).

� Lowest government debt in Europe.

Government debt was 6.1% of GDP in2011. A stable and future oriented statebudget, with a growing interest inentrepreneurs and foreign investors.

9.18 8.988.25

7.066.53 6.33

5.725.1

4.13

0

1

2

3

4

5

6

7

8

9

10

Risk of political instability, global rank

Source: IMD World Competitiveness Yearbook 2011

The higher the rank, the lower the risk

Simple and favourable tax system

� * 0% corporate income tax on reinvested profits

� innovative approach

� Distributions are subject to income tax of 21%

� Personal income tax: flat rate 21%. Same rate for expats

� VAT: 20%

� Social tax: 33% (20% social security and 13% health insurance)

� Unemployment insurance: 3% of the gross salary. (Employer pays

1% of the salary and deduction from employees salary is 2%.)

� No property tax

� All the taxes can be declared via E-tax/e-customs (electronic service

desk of the Estonian Tax and Customs Board)

Source: European Commission

0% *

15.0%

15.0%

19.0%

19.0%

19.0%

26.0%

26.0%

26.3%

30.2%

0.0% 10.0% 20.0% 30.0% 40.0%

ESTONIA

Latvia

Lithuania

Poland

Czech Rep

Hungary

Finland

UK

Sweden

Germany

Tax rate on corporate income, 2011

0% corporate income tax on reinvested profits – favourable for growing companies

Key sectors

Estonia focuses on the following key sectors:

� ICT

� Industrial machinery and metalworking

� Transport and logistics services

� Business and financial services

� Electronics

� Cleantech

Transport and logistics services

Estonia is the geographical midpoint of Northern Europe and a perfect place to generate added value with distribution centres

� Impressive infrastructure – 5 key international ports, 4 free zones, 10 border posts to Russia, block trains to Moscow and Beijing

� Shortest EU flight time to China

� Modern and up to date airports

� the largest port at the Baltic Sea are located in Estonia

� 7th for the Ease of Trading Across Borders.

� 4,000 companies operating in the broader logistics and transportation service sector

� Approximately 36,000 direct employees

Estonian Aviation

� Estonia is one of the few countries who gives free, state subsidised aviation education – pilots, flight controllers, technicians

� It’s essential to us to have our own national carrier –Estonian Air

� We have built modern and up to date airports and flight control center

Ämari Airport

� Ämari Airport is the most modern and high-capacity military airbase in theBaltics.

� All buildings in Ämari are new and have been built in compliance with NATO standards.

� It has the ability to take in up to 1,000 tons of cargo every 24 hours.

� In autumn 2011, almost all the infrastructural facilities were rated as excellent by NATO.

Video – landing of the USairforce transport plane C-17 at Ämari Air Base

What does Estonia have to offer?

� Establishing a company takes 15 minutes

� Foreign and domestic investment are treated equally

� Flat-rate income tax at 21% for all

� 0% income tax on reinvested profits

� No restrictions to the free movement of capital

� Minimal government intervention

Incentive programmes

Incentive schemes for entrepreneurs include:

� Incentives for start-up enterprises

� Incentives for development of enterprises

� Support for export marketing

� Innovation and product development grants

� Technology investment grant for high-impact industrial investors

and subcontractors (starting from investment of €10 million)

Enterprise Estonia offers enterpreneurs

monetary subsidies, consultations,

cooperation and training programmes

Supporting Your Investment –

Enterprise Estonia - Your Business Development Managers

� The largest inationalbusiness support system inEstonia with 300 employees

� Provides grants andassistance for Estonianbusinesses (incl. foreigninvestors) from early stage tolarge business development

Services include:

� General information enquiries

� Detailed investment proposals and studies

� Investment tours of Estonia (scheduling business meetings, identifying properties, organising recruitment, etc)

� Advice on financing (incl grants)

� Negotiations with authorities

� Sourcing

� Investor aftercare servicesFREE and CONFIDENTIAL!

Representations of Estonian Investment Agency

• Tallinn, Estonia

• Helsinki, Finland

• Stockholm, Sweden

• London, UK

• Hamburg, Germany

• Tokyo, Japan

• Shanghai, China

• Moscow, Russia

• Saint-Petersburg, Russia

• Silicon Valley, USA

- 11 offices, 10 countries

- A global network of partners

and service providers

For additional information please contact:

Ahti Kuningas

Phone: +372 6256 468

Mobile: +372 56 252 777

email: ahti.kuningas@mkm.ee

Ministry of Economic Affairs and Communications

www.mkm.ee