OFF THE WIRE

PEACE ACCORD: Estonian and Latvian delegations initialed at a meeting in Riga this week a new agreement on avoiding double taxation. "Early in the summer we got a letter from the Latvian Finance Ministry about Latvia being unhappy with the effective agreement on avoidance of double taxation, and at this meeting the Latvian side presented its proposals for a new accord," the head of the Estonian Finance Ministry's taxation policy department, Lemmi Oro, said Sept. 21. The meeting was successful, ending in the initialing of a new agreement that should come into force on Jan. 1, 2002. The accord is subject to endorsement by the Parliament, but if it fails to be processed in time, it will take effect retroactively. The essence of taxation agreements is the division of the right to impose taxes on certain kinds of income, such as dividends, interest and royalties, between country of origin and country of residence. To avoid double taxation, both countries will apply a method of simple credit.

BITTER SEPARATION: Italian businessman Ernesto Preatoni announced he was giving up his Estonian citizenship the same day the Citizenship and Migration Board asked him for proof of his having relinquished his Italian citizenship. "We sent a letter to Preatoni on Sept. 18 saying we were aware of his double citizenship and asking him to present within six months a certificate to prove he had been released from Italian citizenship or file an application to be released from Estonian citizenship," a board spokesman said. The Citizenship and Migration Board requested the Italian Embassy in Tallinn last month for information as to whether or not Preatoni had abandoned his Italian citizenship. The embassy said he had not done so. The Italian businessman was granted Estonian citizenship at the proposal of Economy Minister Mihkel Parnoja in Dec. 1999 for special services in bringing foreign investments into Estonia. A spokesman for the government said at the time that he had given up his Italian passport.

TRAIN CLASH: Latvia's transportation minister will suggest that the government withdraw support from local authorities refusing to join subsidizing of commuter trains. Anatolijs Gorbunovs said in a statement distributed to the press that he would be forced to make such a proposal in order to raise funds needed for the unprofitable passenger rail network. The minister said that in line with the draft budget for next year the government would extend a 3.1 million lat ($5 million) subsidy to cash-starved passenger services. But the local authorities are refusing to go along with the idea of giving subsidies to loss-making commuter services, particularly in Riga, the nearby resort town of Jurmala and the central Latvian town of Jelgava. They don't like the scheme being proposed, which specifies the precise amount that should be payable by each local authority. Until now, the rail company Latvijas Dzelzcels has been subsidizing the passenger network with the profit it earns from cargo transportation. But the company has been stripped of funds because of the sums needed to maintain its infrastructure and train repairs.

SMOKE CHARMERS: The World Bank's regular mission to Latvia has demanded that the country raise its excise tax on tobacco to the levels accepted in the European Union. A mission from the bank made this demand expressing opinion on the health care reform in Latvia, said Dominic Haazen, the head of a World Bank project by the name of Latvian Health Reform. "Experience of many world countries shows that the most effective means to fight smoking is the increase of excise tax on tobacco," Haazen told reporters Sept. 24. Latvian Finance Ministry's excise tax department head Maris Juruss said that Latvia would not be able to raise excise tax on tobacco to 57 percent of retail price, as required by the EU standards, any earlier than in 10 years. In the Latvian market situation such move would have expressly negative consequences in the form of growing contraband, he explained. Juruss said that currently the Latvian excise tax on cigarettes was some 42 percent of the so-called "most popular retail price" determined by the EU, and the tax could be raised only by 1 percent to 2 percent every year. At present Latvian tobacco excise tax rate is set at 5.1 lats ($8.24) per 1,000 filter cigarettes and 6.1 lats per non-filter cigarettes.

NET MONSTER: Delfi Internet, a Lithuanian Internet service provider, said its monthly sales rose to over 500,000 litas ($125,000) in the period June to August after the company launched the Delfi Standard Internet access plan and revamped its sales strategy in the spring. "More active operations at business centers and the new Delfi Standard service enabled the company to meet its sales targets in the summer months," said Alvydas Vitkauskas, director of Delfi Internet. The company charges a fixed monthly fee for continuous Internet service, which can be accessed both via analogous and digital lines, as well as radio and the Ethernet networks. Delfi Internet offers continuous Internet access services at 25 business centers and hopes to boost the number to 60 by the end of the year. Delfi, owned by the Estonian information technologies group MicroLink, operates in all three Baltic countries and the U.S.A. In Lithuania, it has around 450 users of the continuous access service and around 4,500 dial-up access users.

SUGAR INTERVENTION: On Sept. 24, the Lithuanian Cabinet set the minimum state price and intervention price for white sugar. The minimum state price for sugar manufactured from raw materials purchased according to established quotas has been set at 2.5 litas ($0.625) per kilogram, and the intervention price at 2.43 litas per kilogram. The minimum price has been fixed on a yearly basis under the sugar law, in effect since 1995, while the intervention price will be set for the first time. The government has also commissioned the Ministry of Agriculture to establish white sugar export quotas by Nov. 1, 2001. This year production quotas have been distributed in the following way: 22,000 tons for Marijampoles Cukrus, which is operated by the fertilizer company Arvi, and 90,000 tons for the sugar refineries in Panevezys and Kedainiai owned by the Danish company Danisco Sugar.