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Tuesday 16.01.2018 | Name days: Lida, Lidija
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Tax burden worries start-ups in all three Baltic States

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUStart-ups in all three Baltic States mention high tax burden as the biggest challenge of 2017, according to results of SEB Bank’s study.

Results show that attraction of funding remains a major challenge for start-ups in Baltic States. In Latvia and Lithuania, start-ups also experience difficulties with finding qualified workers. Their Estonian colleagues mention problems with attracting new clients.

SEB Bank board member Arnis Skapars: «Establishing a positive financial flow to cover business costs is the toughest challenge for the starting point of any business. This is why payment of taxes can cause serious headaches in the first years of starting a business. This situation in Latvia, Lithuania and Estonia is similar in this regard.»

Continuing, he adds: «In my experience, the deciding factor for success has always been the level of ambition of every new company, as well as their ability to act and fight for their place under the sun. I see some reasons for optimism here, because 53% of Latvian start-ups are busy working on products and services, 24% invest in training of their employees, 21% develop new business models, and only 26% have no plans to introduce any innovations.»

An addition, Skapars mentions that until companies are able to form a stable flow of finances and risk balance allows them to attract bank funding, the role of credit institutions is that of supporting emerging businessmen with efficient transaction solutions, advice and experience.

Interesting differences are noted in the reasons used by Baltic residents to start their own business. 38% of Latvia and 35% of Lithuanian respondents mentioned the main reason for them is the desire to increase their income. 35% of Estonian start-up businessmen mentioned the goal to become independent, according to study results.

Latvian Investment and Development Agency’s Innovation Support Department manager Sarmite Karlsone comments the situation the following way: «Latvia has a developed ecosystem that helps emerging businessmen develop their ideas. Creation of regional incubators and Start-up Law also served as positive impulses. We have noticed that emerging businessmen have to improve their sales skills, because the ability to present a product goes a long way on the global market. This is why we help establish information exchange between experienced and young businessmen.»

In addition, 57% of respondents in Latvia said they would like to receive advantageous offers and discounts for everyday transactions, 37% would like to participate in seminars and training organized by banks, and 29% would like to receive new digital solutions to simplify work with banks.

42% of start-ups in Latvia, 39% in Estonia and 50% in Lithuania plan to take on more employees this year. The majority of businesses in Baltic States (60% in Latvia, 66% in Estonia and 63% in Lithuania) focus their activities on domestic markets. 67% of Lithuanian, 80% of Latvian and 84% of Estonian companies plan that their turnover will not exceed EUR 100,000 this year, the data suggests.

ZGI Capital investment director Rudolfs Krese mentions: «The second generation of start-ups has begun growing in Baltic States after the first wave of success. Success stories like Skype inspire others – if they accomplished that, so can I. Most concerns are associated on the excessive focus on domestic markets. Our advice is for companies to consider exports from day one, and use Latvia’s market to test products.»

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