Management must be physically located in the country

The Estonian government approved a proposal on Dec.1, 2016, made by Minister of Justice Urmas Reinsalu in connection with Estonia’s e-residency project, to repeal the requirement that the management board of a company registered in Estonia must be physically located in the country. The change is to take effect in January 2018.

The law will create the opportunity to manage businesses registered in Estonia from abroad. In such situations, however, the company would have to specify a contact person through which a connection to Estonia would be preserved, spokespeople for the Estonian government said.

The new law will also make submitting the email address of the company’s owner to the Central Commercial Register compulsory. Currently about 7 percent, or nearly 14,000 business-owners, have not submitted their email addresses to the centralized register.

Estonia is the first country in the world to provide e-residency, which it launched on Dec. 2, 2014. E-residency is a state-issued secure digital identity for non-residents that allows people living abroad to operate in Estonia’s e-environment and use e-services on par with Estonian residents.

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The turnover of retail trade enterprises was 537 mEUR in October

According to Statistics Estonia, in October 2016 compared to October 2015, the turnover of retail trade enterprises increased 2% at constant prices. The deceleration in turnover growth was influenced the most by enterprises engaging in the retail sales of automotive fuel.

In October 2016, the turnover of retail trade enterprises was 537.4 million euros. The deceleration in turnover growth was influenced the most by enterprises engaging in the retail sales of automotive fuel, where the sales decreased 12% compared to October 2015. The turnover fall in these enterprises was partly influenced by the high reference base of October 2015 and acceleration in the price increase of automotive fuel.

The turnover of grocery stores has been rather stable in recent months. In October, the turnover of these stores remained on the same level as in October 2015.

The turnover of stores selling manufactured goods increased 10% compared to October 2015. Turnover increased in all economic activities. The increase was the biggest in stores selling pharmaceutical goods and cosmetics, with sales having increased 15% compared to October of the previous year. An above-average increase in turnover occurred also in other specialised stores, such as stores selling computers and their accessories, books, sports equipment, games and toys etc. (14% growth). In October, the turnover of non-specialised stores selling predominantly industrial goods (e.g. department stores), having shown a small decline in September, went on an uptrend again and grew 3% compared to the same month of the previous year. Turnover increased also in stores selling textiles, clothing and footwear (6% growth), in stores selling second-hand goods and in non-store retail sale (stalls, markets, direct sale) (7% growth), in stores selling household goods and appliances, hardware and building materials (9% growth) and in stores selling via mail order or the Internet (10% growth).

Compared to the previous month, in October, the turnover of retail trade enterprises increased 3%. According to the seasonally and working-day adjusted data, the growth was 1%. In the ten months of 2016 (January–October), turnover in retail trade enterprises increased 4% compared to the corresponding period of the previous year.

In 2016, to publish monthly statistics on retail trade, Statistics Estonia started to use only the VAT declaration data of the Estonian Tax and Customs Board and stopped data collection with the questionnaire “Turnover”. This reduced the response burden of entrepreneurs and Statistics Estonia’s expenditure on data collection, and increased the use of administrative data. Due to the change in the data source, the monthly news release “Retail trade” will focus on the turnover of retail trade enterprises, instead of the retail sales of such enterprises. Statistics Estonia will continue publishing the retail sales indicator of retail trade enterprises on a quarterly and yearly basis. Statistics Estonia published the monthly summary in four working days. For the statistical activity “Economic indicators of trade enterprises”, the main representative of public interest is the Ministry of Economic Affairs and Communications, commissioned by whom Statistics Estonia performs this statistical activity.

Source: Statistics Estonia

The profit of the business sector decreased in Q2

According to Statistics Estonia, in the 2nd quarter of 2016, the total profit of the business sector was 671 million euros, which was 6% less than in the same period a year ago.

Compared to the 2nd quarter of 2015, total profit decreased in almost all economic activities. The biggest contribution to the growth in total profit was made by trade and information and communication enterprises. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and transportation and storage enterprises.

In the 2nd quarter of 2016, enterprises sold goods and services for 12.6 billion euros, which was 1% more than in the same period a year ago. The turnover of trade enterprises, having the biggest share in the total turnover of the business sector, increased 2%, influenced mostly by a decrease in the turnover of wholesale trade. At the same time, the turnover of retail and motor trade continued to grow. The turnover of manufacturing enterprises increased 3%.

Compared to the same period a year ago, the total costs of enterprises increased 2%, which includes a 6% increase in personnel expenses. The number of persons employed as well as the number of hours worked increased 4%. The labour productivity of the business sector on the basis of value added amounted to an average of 5,400 euros per person employed per quarter, remaining on the level of the previous year.

The investment activity of enterprises continues to be at a low level. In the 2nd quarter of 2016, enterprises invested 496 million euros, which was 5% less than in the same period the year before. The investments were made mostly in machinery and equipment and buildings. The main investors were manufacturing, trade, transportation and storage enterprises, who made about a half of the total investments of all enterprises. Compared to the 2nd quarter of 2015, investments in transport equipment and computer systems increased, while other investments fell.

Diagram: Total profit of the business sector, 1st quarter 2010 – 2nd quarter 2016

Source: Statistics Estonia

Businessman Oliver Kruuda doesn’t agree with suspicions

Businessman and owner of Tere AS, Oliver Kruuda, said in an interview with ERR’s TV news on Thursday that he didn’t agree with the suspicions raised against him, but that Tere would likely need to be broken up. Kruuda had been arrested earlier this week on suspicions of tax fraud.

Kruuda said in the interview that there were different interpretations of the situation rather than a tax fraud case. He doesn’t see a reason why Tere AS should file for bankruptcy, but instead said that the company would be reorganized.

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Estonian aircraft maintenance company opens warehouse at Gatwick

Estonian aircraft maintenance company Magnetic MRO opened a warehouse at Gatwick, the UK’s second-largest airport, which will enable it to improve the supply of goods to its customers.

Establishing a warehouse at Gatwick was part of Magnetic MRO’s growth strategy and reflected customers’ growing interest in its services, the company said.

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The profit of the business sector decreased in 1Q

According to Statistics Estonia, in the 1st quarter of 2016, the total profit of the business sector was 521 million euros, which was 12% less than in the same period a year ago.

Compared to the 1st quarter of 2015, total profit decreased in almost all economic activities. The biggest contribution to the growth in total profit was made by information and communication enterprises. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and transportation and storage enterprises.

In the 1st quarter of 2016, enterprises sold goods and services for 11.7 billion euros, which was 2% more than in the same period a year ago. The turnover of trade enterprises, which have the biggest share in the total turnover of the business sector, increased 7%, influenced mostly by an increase in the turnover of wholesale trade. The growth was supported also by retail and motor trade. The turnover of manufacturing enterprises stayed on the level of the previous year.

Compared to the same period a year ago, the total costs of enterprises increased 2%, which includes a 6% increase in personnel expenses. The number of persons employed as well as the number of hours worked increased 3%. The labour productivity of the business sector on the basis of value added amounted to an average of 4,900 euros per person employed per quarter, i.e. 2% more than in the 1st quarter of 2015.

The investment activity of enterprises continues to be at a low level. In the 1st quarter of 2016, enterprises invested 443 million euros, which was 5% less than in the same period the year before. The investments were made mostly in buildings, and machinery and equipment. The main investors were manufacturing, trade, energy and transportation enterprises, who made more than a half of the total investments of enterprises. Compared to the 1st quarter of 2015, investments in transport equipment and computer systems increased. Other investments fell, with the biggest decrease registered in investments in land.Diagram: Total profit of the business sector, 1st quarter 2010 – 1st quarter 2016

Source: Statistics Estonia

Profit of the business sector decreased in 2015

According to the preliminary data of Statistics Estonia, in 2015 the total profit of the business sector was 3.0 billion euros, which was 8% less than the year before. The increase in the business sector’s total profit turned to decline after five years of growth.

Compared to 2014, the total profit decreased in almost all economic activities. The biggest contribution to the total profit was made by real estate activities. The growth in the profit of the business sector was negatively influenced mostly by manufacturing and energy enterprises. The profit of manufacturing decreased 16% compared to 2014, mainly due to the decreased profits in the manufacture of electronics and fuel oil products.

In 2015, enterprises sold goods and services for 49.1 billion euros, which was 3% less than the year before. The turnover of trade enterprises, which have the biggest share in the total turnover of the business sector, decreased 3%, influenced mostly by a decrease in the turnover of wholesale trade. At the same time, the turnover of retail trade and motor trade continued to grow. The turnover of manufacturing enterprises stayed the same as the year before.

Compared to 2014, the total costs of enterprises decreased 2%, while personnel expenses increased 7%. Both the number of persons employed and the number of hours worked increased 2%. The labour productivity of the business sector on the basis of value added amounted to an average of 22,100 euros per person employed in a year and stayed on the same level as in 2014.

The investment activity of enterprises continued to decrease for the third year in a row. In 2015, enterprises invested 2.3 billion euros, which is 4% less than the year before. Similarly to 2014, the largest investments were made mainly in equipment and machinery and in the construction and alteration of buildings. The main investors were manufacturing, energy and trade enterprises with about a half of the total investments of enterprises. Compared to 2014, the investments in acquisition of buildings and in equipment and machinery increased. Other investments decreased, with the biggest decrease registered in investments in land.

In the 4th quarter of 2015, enterprises sold goods and services for 12.7 billion euros, which was 2% less than in the same period of 2014. In the 4th quarter of 2015, enterprises invested 759 million euros, i.e. the same as in the 4th quarter of 2014.Diagram: Total profit of the business sector, 2002–2015

Source: Statistics Estonia