Estonian Legal Developments Newsletter January-February 2006

Environmental Fees Act Adopted

On 7 December 2005 the Estonian Parliament (Riigikogu) adopted the Environmental Fees Act. The new act sets forth rules for calculating and paying environmental fees, as well as rules for using, controlling and reporting the funds so collected. Prior to the Act, the bases for charging environmental fees were contained in various laws. Now all fees related to natural resources and environmental protection have been brought under the umbrella of the new act. Under the law there are two types of environmental fees: fees for the right to use the environment and pollution charges. Fees for the right of use include fees for regeneration cutting of standing crops, mineral rights, special use of water, fishing rights, and for the right to use hunting districts. Some rates have been increased in the new Act. Pollution charges are fixed until 2009. Under certain circumstances the obligation to pay pollution charges can be replaced by the obligation to fund environmental protection measures. The law entered into force on 1 January 2006.

On 15 December 2005 the Riigikogu approved the Common Development Plan for Estonian Television and Estonian Radio for 2006-2008. The development plan was adopted under the Broadcasting Act. Under applicable legislation Eesti Raadio and Eesti Televisioon are two separate legal persons in public law, both acting as broadcasters. The plan is to establish a single legal person in public law, as the Estonian national broadcaster, which would merge the two. The development plan entered into force on 16 December 2005.

On 7 December the Riigikogu adopted the Act Amending the Alcohol, Tobacco and Fuel Excise Duty Act. The most important change is to move forward the dates for increasing tobacco excise duty rates by one year. Thus in 2006, the rate will be 28% (earlier envisioned for 2007), and in 2007, 29% (earlier envisioned for 2008) Revenue stamps for alcohol also are introduced. Strong alcohol is now subject to revenue stamping. Other amendments include charging the excise duty on biofuel, changing the procedure for supplying aircraft, ships and diplomats with excise goods and improving the wording of provisions regulating the exemption from excise duty of handlers of biofuel and chemicals. The amendments entered into force on 1 January 2006. Alcohol not bearing revenue stamps which is released for consumption prior to 1 July 2006 may be sold until 30 September 2006.

On 7 December 2005 the Riigikogu passed the Act Amending the Value Added Tax Act and the Taxation Act. The Value Added Tax Act has undergone especially sweeping change. The objective of the amendments is to bring the Estonian Value Added Tax Act into line with the EU Sixth Directive (as amended), the main act regulating turnover taxes in the EUs. Under the amended act, the time in when value added tax payable upon importation of goods can be deducted as input VAT is brought forward by one month in certain circumstances. Also, the scope for using the 5% reduced rate on medical equipment is narrowed and will be applicable only to medical equipment for the personal use of disabled persons. Other major changes include the introduction of provisions deriving from the directive on the taxation of electricity and gas, rules for the taxation of services of intermediaries, the tax warehouse regime, specification of taxation rules for transport and forwarding services, and for processing and other similar cross-border services related to goods and restricting the scope of financial services deemed as exempt supply. Provisions regulating the refunding of value added tax have also undergone some change: in certain very limited cases The period for giving refunds can be extended by 30 calendar days at a time, up to a total of 90 calendar days. Most amendments took effect on 1 January 2006, and some will enter into force on 1 January 2007.

On 23 November 2005 the Riigikogu adopted the Aliens Act Amendment Act. The amendments aim to promote tourism and simplify the terms for granting short-term visas. Pursuant to the amendments, aliens may be issued a single-entry short-term visa for a stay in Estonia of up to five calendar days for the purpose of using tourist or recreation services, without the need to have an invitation or a person to issue an invitation. In order to be granted a visa the alien must have sufficient means to support his or her stay and as well as accommodation in and departure from Estonia. The amendments entered into force on 1 January 2006.

On 16 November 2005 the Riigikogu passed the Act Amending the Natural Gas Act and the State Fees Act. The purpose of amending the law is to bring it into compliance with the Directive of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas. This amendment achieves harmonisation of the requirement arising from the directive to legally separate network services and sales activities of natural gas undertakings, in order to ensure efficient and non-discriminatory network access and create competition between sellers of gas. The amendments entered into force on 11 December 2005.

On 8 December 2005 the Riigikogu passed the Copyright Act Amendment Act. The aim of the amendments is to include certain provisions that had been set forth in secondary legislation into the body of the law itself. For example prior to the amendment, the Minister of Culture determined the amount of remuneration that could be paid for use of audiovisual works and sound recordings of works, even if under the Constitution, all duties, fees and payments "shall be provided by law". The amendments brought the relevant provisions into the scope of the law. The amendments entered into force on 12 January 2006.

On 8 December 2005 the Riigikogu adopted the Consumer Protection Act Amendment Act. Pursuant to the amendments service providers must inform their consumers of the final sales price of the service, which includes value added tax, and other taxes and payments. If it is impossible to determine the precise sales price of a service in advance, the consumer must be informed of the component parts making up the sales price of the service, the tariffs or grounds serving as a basis for calculating the price in such a manner that the consumer can calculate the sales price of the service with sufficient precision. The amendments took effect on 8 January 2006.

On 26 January 2006 the Riigikogu passed the Act Amending Acts Related to the Issue and Use of Privatisation Vouchers. The amendment extend the term for using privatisation vouchers until 31 December 2006 and set forth that all claims for compensation that have not been resolved by the deadline will be paid out in cash. Payments will commence one year after the issuing of the vouchers has been terminated. Based on this, the whole process should be completed within five years. Under an earlier amendment, the issuing of privatisation vouchers stopped on 31 December 2005. Deadlines were also established to carry out acts necessary for compensating property and privatisation vouchers. The amendments took effect on 4 February 2006.

On 22 December 2005 the Government of the Republic established the minimum wage in its Regulation no 328. Under the Regulation the minimum hourly wage is 17.80 EEK and the minimum monthly wage is 3000 EEK in case of full-time work that started from 1 January 2006.

The regulation was issued on the basis of the Securities Market Act. The regulation prescribes the possibility for the Supervision Authority to make, upon an application of a person and under certain conditions, exceptions regarding the disclosure of information or the composition of information in a prospectus. If the Home Contracting State of the issuer of the securities offered is not Estonia, the relevant application may be filed with the Supervision Authority by a securities market supervisory agency of an EEA Contracting State. The regulation entered into force on 6 January 2006.

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