Estonia is ramping up its shipping ambitions with a rejigged shipping register designed to lure vessels and know-how.
The country introduced new legislation this summer to reduce costs and simplify procedures for shipowners.
"Our new tax regime has been in force since 1 July 2020, so it is a very short period," Tarmo Ots, head of external affairs at the Estonian Maritime Administration (EMA), told TradeWinds:
"Just to bring ships under our flag is not the main purpose we are doing this. We would like to develop our onshore maritime sector, and bring more know-how here."
Ots said Estonia has a "good IT and cyber security image in the world". This encouraged EMA to try to enhance its reputation and become a bigger player.
"The ultimate objective is to enhance the development of the Estonian maritime sector," Ots added.
Part of the new deal is a tonnage tax approved by the European Commission, which will see fees paid on gross tonnage rather than profit, in line with many other European countries.
Under the tonnage tax, newer ships have an advantage, Ots explained.
For a 12-year-old, 30,000-gt vessel, the tax liability is €805 ($954) per month, but for a five-year-old ship of the same size, the bill is reduced to €403.
Crew pay nothing
There is also a new regime for overseas crew members on Estonia-flagged vessels, who will pay a zero rate of income tax.
They will be allowed to benefit from the Estonian pension system and buy health insurance from the Estonian Health Insurance Fund.
Foreign owners can bring in bareboat-chartered vessels under a simplified system of two registers.
The first needs a "responsible person" based in Estonia, ie a shore-based company established there.
The second register will take vessels from companies registered outside the country, with an annual fee payable based on tonnage.
This is €25,000 for a ship above 20,000 gt.
Citizens of third countries can establish their business in Estonia if they have become "e-residents."
Virtual residency?
An e-resident can sign documents digitally and use public e-services provided by the state, such as the seafarers information system MIS and the ship information system LIS.
A security check must be passed before e-residency is granted, however.
The EMA said: "The new tax regime has been in force for a short time and it is too early to expect a considerable number of new ships reflagging under the Estonian flag yet.
"Nevertheless, Estonia’s trend to implement state-of-the-art technical solutions will enable us to carry out all flag state processes related to ships and seafarers online, from a distance, and the IT capabilities necessary for that are constantly being improved, which will strengthen our image as an innovative, business-friendly and customer-oriented flag state."
Estonia is on the Paris MOU's white list for port state control inspections.
