Heinzel Group said that it has made industrial investments in Estonia in good faith and expecting the country to offer a predictable and stable tax environment, which it has unfortunately not experienced over the past ten years. The company described the new rise in energy taxes as deceptive behavior on the part of the government which would undermine the legitimate expectations of foreign investors.

The letter to Estonian Prime Minister Juri Ratas was signed by Kurt Maier, CEO of Heinzel Group.

Maier has previously said that it doesn't make sense for Heinzel Group to increase its investments in Estonia under present conditions.

Since investments in growth lack perspective on the present level of taxation, Estonian Cell made the first 3.4 million euro equity capital repayment to the owner in November 2016, he said.

The parent company CEO noted that the current output of Estonian Cell exceeds project capacity by more than 20 percent and the current growth strategy cannot be continued without additional investments to eliminate bottlenecks.

Energy taxes in Estonia are already so high that the plant consuming more than 200 gigawatt-hours of electricity pays anywhere from 4-6 million euros more in national energy taxes annually than plants with similar levels of electricity consumption in Finland, Austria, Sweden or Germany.

Therefore, Maier is asking the Estonian government to forgo the planned tax hike and complement legislation with a regulation to impose tax ceilings for electric energy and natural gas to ensure the competitiveness of major industries. He is also asking for the opportunity to meet with the Estonian prime minister to discuss the impact of the tax environment on modern, highly efficient and energy-intensive industrial investments.

The new Estonian coalition government is planning to increase the excise duty on natural gas by almost half in 2018 and by as much as 134 percent by 2020. The tax is slated to increase from the current 33.77 euros per thousand cubic meters to 40.52 euros next year, 50.65 in 2018 and 63.32 in 2019. After that, it is scheduled to jump to 79.14 euros per thousand cubic meters in 2020, it appears from figures made available by the Ministry of Finance.

The Ministry of Finance is also planning to come up with proposals in conjunction with the Ministry of Economic Affairs and Communications by spring 2017 for the differentiation of tax rates for energy-intensive businesses in order to enhance the competitiveness of the Estonian industrial sector.