Tax bur­den re­mains a se­ri­ous ob­sta­cle to start a busi­ness in Baltic States

Baltic News Network - - News -

For the sec­ond con­sec­u­tive year com­pa­nies newly-founded in Baltic States men­tioned the high tax bur­den as their big­gest chal­lenge. At­trac­tion of ini­tial fund­ing is also a ma­jor chal­lenge for as­pir­ing en­trepreneurs in Baltic States. In­ter­viewed busi­nesses in Latvia and Lithua­nia also men­tioned dif­fi­cul­ties with fund­ing qual­i­fied em­ploy­ees, whereas busi­nesses in Es­to­nia more of­ten men­tioned prob­lems with find­ing clients, ac­cord­ing to re­sults of a study per­formed by SEB Bank.

SEB Bank’s board mem­ber Ar­nis Ška­pars: «Se­cur­ing a pos­i­tive flow of fi­nances is the most dif­fi­cult task for any busi­ness in their early days. With that, pay­ment of taxes can cre­ate se­ri­ous headaches in the first cou­ple of years. The sit­u­a­tion is iden­ti­cal in Latvia, Lithua­nia and Es­to­nia. On top of that, tax pay­ment re­mains the big­gest chal­lenge for newly-formed busi­nesses in all three Baltic States for the sec­ond con­sec­u­tive year. At the same time, over­com­ing this chal­lenge is a good test for longevity of busi­ness ideas and busi­ness­men.» Sur­vey data shows that the num­ber of Lat­vian com­pa­nies that con­cen­trate their ac­tiv­i­ties on the lo­cal mar­ket has in­creased sig­nif­i­cantly – 70%, which is 10 per­cent­age points more when com­pared to last year. The pro­por­tion of newly-formed com­pa­nies that wish to en­gage in ex­ports has de­clined 8% (11% a year ago). 22% of new­ly­formed com­pa­nies (29% last year) have plans to work on the do­mes­tic mar­ket and per­form ex­ports.

«Grow­ing fo­cus on the do­mes­tic mar­ket is mak­ing us worry. Of course, on one hand, the qual­ity of life and pur­chas­ing power of Lat­vian res­i­dents does in­crease. How­ever, look­ing in a long-term per­spec­tive, de­mo­graphic ten­den­cies are un­for­giv­ing. Sooner or later it will force any com­pany with am­bi­tion to grow and de­velop to search for new mar­kets out­side the coun­try’s bor­ders. It would be best to con­sider that from day one,» says Ška­pars.

In Lithua­nia and Es­to­nia, on the other hand, there has been an in­crease of com­pa­nies fo­cus­ing on ex­ports: from 8% to 11% in Es­to­nia, and from 18% to 23% in Lithua­nia. The sur­vey was per­formed, in­ter­view­ing more than 1,500 Lat­vian, Lithua­nian and Es­to­nian com­pa­nies whose age does not ex­ceed three years.


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