British Prime Minister Rishi Sunak would do well to follow Estonia's lead in fostering tech and business and slashing bureaucratic red-tape, following his recent visit to the country, UK paper The Daily Telegraph reports.
The Telegraph notes Estonia's size and apparent natural resources situation as no bar to outstripping Britain and other OECD nations in economic growth in recent years, but at the same time, the daily does not sugar coat drawbacks such as labor shortages, particularly in the tech sector.
The latter was still a key talking point, in addition to defense and security, Ukraine and NATO, at Monday's meeting between Prime Minster Sunak, a former banker noted for his wealth, and his Estonian counterpart, Kaja Kallas – a person who, along with her government, is seen as an ally to business and tech and not an antagonist or meddler.
The highest level of investment per capita in Europe, at 3.6 percent of GDP, nearly a decade of holding the title of most competitive tax system worldwide, according to some reckonings, and a lack of bureaucracy and corruption all play their role here – as they do in neighboring Latvia, which Sunak also visited as part of the same trip.
The Telegraph puts the current unicorn companies* tally in Estonia at 10 – by far the highest per capita worldwide – and notes that this is not a new phenomenon, since Skype was already a unicorn, even if the term did not exist then, when it was snapped up by Microsoft over a decade ago.
Indeed, Skype has blazed the trail and engendered a tight-knit, global tech "mafia" (in a positive sense), one which is cooperative and lacking in envy, Sandra Särav, Deputy Secretary General for Business and Consumer Environment at the Ministry of Economic Affairs told The Telegraph.
The startup sector in Estonia is now growing by around 30 percent per year and boasts more than 1,400 registered firms, The Telegraph adds, citing a figure of €21bn as the combined value of the top 25 tech firms, almost double the state budget, the paper says (the 2023 state budget revenues are set at €15.6 billion - ed.).
The Telegraph also says a new record was attained in the setting up of a new company, which an Austrian entrepreneur managed to do in 5-and-a-half minutes in front of a tech conference audience in London recently, thanks in no small part to the famed Estonian e-residency scheme.
E-residency permits company founders to both avail themselves of Estonia's low corporate tax regime and to gain access to the EU single market, The Telegraph says, and, it is hoped, might attract some of its over 100,000 members, ie. roughly the population of Tartu, to become actual, physical residents.
Since corporate tax is only paid when profits are distribute via dividends etc., loss-making firms, or those reinvesting their profits, effectively pay no corporate tax, The Telegraph says (though this system has been facing pressure at EU level, it is likely to be able to remain in place for the next few years-ed.).
The original Telegraph piece is here.
*Meaning a firm with a market valuation of at least a billion US dollars.
Editor: Andrew Whyte
Source: The Telegraph