Estonia, EU – Baltic States, Legislation, Markets and Companies, Taxation

At the end of December state prosecutor Marek Vahing launched an investigation to determine whether the statements of Soorm regarding large-scale tax fraud are true. Soorm said at an interrogation at the Central Criminal Police that the Finnish parent company took tens of millions of euros out of Estonia over a period of several years and did not pay taxes.

"No suspicion has been launched against anybody," spokesman for the prosecutor's office Harry Tuul told the newspaper.

The Finnish bosses of the company have made no statements regarding the investigation and it is possible they do not know about it, the weekly said.

Anne Mere, who was named head of the Estonian unit of HKScan after Soorm, said that the Tax and Customs Board is indeed interested in the activities of HKScan and she received the most recent letter from the tax authority last week. She added that she knows nothing about Vahing's investigation.

In Estonia, a company has to pay income tax when it pays out profits in dividends. HKScan did not collect any dividends in Estonia, but still easily got money from Estonia, the newspaper writes. Estonian profit was "loaned" to the parent company and every year the deadline for paying back the "loan" was extended. For instance, in 2010 the parent company owed 9 mln euros and the deadline for paying back the loan was the end of 2012. A year later the owed sum was still 9 mln euros and the deadline had been postponed until the end of 2013. And another year later the loaned sum was still 9 miln euros and the deadline the end of 2014, Eesti Ekspress reports.