Tallink ship switches from Estonian to Latvian flag

  • 2006-08-30
  • From wire reports

ALLEGIANCE: Tallink executives did not hesitate to reregister the Regina Baltica for the sake of Latvia's tax incentives, which will save the company several hundred thousand euros.

TALLINN - Economy Minister Edgar Savisaar blamed government colleagues for failing to back a plan that may have prevented a Tallink vessel from sailing under the Latvian flag. Savisaar was quoted as saying on Aug. 28, "Our [the Economy Ministry's 's ed.] repeated attempts to support Estonian shipping to bring it to a level which is competitive in Europe have yielded no result. The government has discussed subsidies for shipping on two occasions at the initiative of the Ministry of Economy and Communications. On both occasions, our proposals were rejected."

Tallink's Regina Baltica, which sails between Stockholm and Riga, began operating under the Latvian flag this week thanks to a number of incentives provided under Latvian regulations.

Tallink said Latvia's laws were more favorable and economically more advantageous for shipping companies and for workers on vessels, the main difference being the Latvian government's subsidies on social tax and income tax for Latvian workers.
With the current mixed Estonian and Latvian personnel on the Regina Baltica, the estimated annual saving for Tallink would be 2 million kroons (130,000 euros), and the net salaries receivable by the Latvian seamen would be approximately 2.5 million kroons higher per year, Tallink said.

The rate of cost-saving will possibly even increase in proportion to the number of Latvians working on the vessel, a company official added.
"The Ministry of Economy and Communications earlier warned against this and does not consider it right," Savisaar said. "At the same time, we understand that change of flag makes operating the ship cheaper for Tallink, since there are a number of extra terms in Latvia that Estonia doesn't have."

Savisaar is chairman of the Center Party, one of three in the ruling coalition. The other two are the People's Union and the Reform Party.