OFF THE WIRE

TAX CHANGES: The Lithuanian government on May 2 passed a draft law on personal income tax and accompanying amendments to the laws on profit tax and tax administration which decrease the number of income tax rates from the current eight to two. The law would set tax rates of 33 percent and 15 percent for different types of personal income and would become effective Jan. 1, 2003. Under the bill, which is yet to be endorsed by the country's Parliament, the 15 percent tax rate would be applied to royalties and income under copyright agreements. The current tax rate on that type of income is 13 percent. The 15 percent rate would be also applied to pension benefits paid to pension scheme participants – that rate is currently 33 percent – and insurance benefits. The 33 rate would be applied to all other types of income. The bill also calls for lowering the income tax rate on dividends from the current 29 percent to 15 percent. The Finance Ministry is also proposing to raise the maximum tax-exempt income to 290 litas ($72.50) starting in early 2003. (Baltic News Service)

MORE FLIGHTS: Latvia's national air carrier, airBaltic, plans to increase its number of flights to Berlin and Vienna due to increased demand, a company spokeswoman said. The airline will make three flights to Vienna per week instead of the current two and will add a fourth flight per week to Berlin. The new flights will begin in June, according to spokeswoman Vija Dzerve. AirBaltic began offering flights to Vienna on April 1 and to Berlin on May 1. The booking rate on the Riga-to-Berlin flight for the first few flights was about 75 percent, said Dzerve. But some flights this month are already fully booked. (BNS)

UNEMPLOYMENT DOWN: Lithuania's unemployment rate dropped 0.8 percent in April from the figure for the previous month to 11.8 percent of the work force, the national labor bureau said May 6. The unemployment rate in April fell by a full percentage point from the figure for the same month in 2001. The bureau said 206,100 people were registered as unemployed on May 1, down by 15,000 over one month. (Agence France-Presse)

DUMPING PROBE: Latvia's domestic market protection bureau is set to increase anti-dumping checks on more Lithuanian dairy products, including cream, butter, kefir and cottage cheese, bureau director Astrida Tjusa said. Tjusa said the bureau was currently monitoring Lithuanian milk imports and would issue a decision whether to include the other dairy products in the probe. The bureau plans to release protective measures in June to prevent milk dumping following complaints from Latvian dairy producers. (BNS)

CONNECTED: The number of mobile phone users in Estonia grew by 13,000 in the first-quarter of this year to a total of 724,000, according to data released this week by network operators. Eesti Telekom's mobile operator EMT reported it had 391,000 subscribers at the end of the first quarter and a market share of 54 percent. Radiolinja said it had contracts with 147,500 clients, giving the firm a market share of 20.4 percent. The number of clients of the third mobile operator, Tele2, is about 185,500 – a market share of 25.6 percent. According to the figures, about 53.2 percent of Estonians have mobile telephones. (BNS)

GAS PRIVATIZATION: The Lithuanian Privatization Commission on May 3 approved a program for privatization of the local liquefied gas company Suskystintos Dujos. The initial selling price of the state-owned stake of 92.36 percent in Suskystintos Dujos has been set at 31.7 million litas ($7.92 million). The State Property Fund will announce a tender for the sale of Suskystintos Dujos in early June and applications will be accepted June 26 through July 23. Suskystintos Dujos has been operating as a separate entity since early 2001, after it was spun off from the national gas utility Lietuvos Dujos together with the gas equipment company Dujiniai Irengimai. (BNS)

POACHED: One of the founders of the personnel recruiting company CV-Online and a business hero in Estonia, Juri Kaljundi, started work this week as head of public relations and marketing with the Baltic states' leading IT concern MicroLink. Kaljundi's tasks include coordination of public relations of the group's Baltic operations, contacts with the media and coordination of the company's general marketing strategy, as well as management of information flows within the company, MicroLink said. From 1994 to 1999 Kaljundi was co-founder and chairman of the board at AS Stallion, a data protection services and Internet solutions provider. Between 1999 and 2001, CV-Online expanded under his management into the other Baltic states and opened branch offices in Prague, Budapest and Warsaw. (BNS)

READY AND UNWILLING: Many Latvian businesses say they are very well prepared for work in the European Union but are nonetheless highly skeptical about Latvia's membership, according to a recent poll. Conducted by the association of Europe's chambers of commerce and industry, Eurochambres, the survey shows that 60 percent of businesses polled in Latvia, Lithuania and Hungary have begun preparing for operations in the EU market. The lowest percentage of respondents that said they were prepared for EU membership were in Slovenia and Estonia at 39 percent and 27 percent respectively. The poll shows that Latvian and Estonian companies are the most pessimistic regarding their chances to complete within the EU. About 27 percent of businesses in Latvia responded that they were dissatisfied with the progress of EU membership talks. The poll also shows that businesses in the candidate countries are generally poorly informed about the EU, with just 8.8 percent of the polled business people in all the candidate countries saying they are well-informed and 35.5 percent responding that they don't know anything about the EU or are not greatly interested in the issue. (BNS)