TALLINN - Finnish Finance Minister Antti Kalliomaki meeting with his Estonian
colleague, Tonis Palts, on Sept. 5 said Finland would not apply rules
regulating business with low tax-rate countries to Estonia.
A spokesman for the Estonian Ministry of Finance said that this would mean
that the Finnish Tax Board would not tax the incomes of Finnish companies'
Estonian subsidiaries, but added that the two countries planned to continue
talks on the issue.
Kalliomaki and Palts also discussed the types of problems that Estonia's
accession to the European Union might create, with the former expressing
concern about the large disparity between the two countries' alcohol excise
rates. The two ministers stated the need for closer cooperation between the
their finance ministries, particularly in the areas of taxation and customs.
The taxation problem between the two countries recently surfaced in a
situation concerning the Finnish company Helsinki Consulting Group, which
has an Estonian subsidiary named Esko Koolitus.
Although Esko Koolitus had paid tax on its dividends for 2001 profit to
Estonia, the Finnish Tax Board -- justifying the claim by Estonia's low tax
level-- asked Helsinki Consulting Group to pay tax on profits earned in
Estonia.
Both the Organization for Economic Cooperation and Development and the
European Commission have declared that a low tax rate and even lack of
income tax alone do not make a country a tax haven and that according to
international criteria Estonia cannot be regarded as such.
