“Narva support measures for entrepreneurs creating new jobs” Georgi Ignatov Narva City Dep-t for Development and Economy April 2010

Aim The support measures foreseen in the present order are aimed mainly at increasing of the employment of Narva residents. The new measures are aimed just to facilitate the emergence of a large number of jobs in a relatively short time, while the scope of activities of the enterprises can be both traditional and new for the city of Narva.

The order of support for entrepreneurs creating new jobs approved by the Resolution of the Narva City Council no. 9 from

Who is supported:  Foreign entrepreneurs – the branches of foreign enterprises, registered in the Commercial Register of Estonia; the companies, entered into the Commercial Register of Estonia, in which more than 50% is held by individuals or juridical persons, who are not the subjects of law in Estonia.  Entrepreneurs from the other towns of Estonia – the non-foreign entrepreneurs, who are the subjects of law in Estonia and whose location site and enterprises are not situated in the administrative territory of the city of Narva.  Local entrepreneurs – the entrepreneurs, whose location site or the enterprises, through which they perform their activity, are situated in the administrative territory of the city of Narva, and who are not the foreign entrepreneurs or the entrepreneurs from the other towns of Estonia.

General principles of support (1/2) 1. All supporting measures, foreseen by the present order, are provided only in case of creating new jobs for the registered residents of Narva. The persons hired within the scope of the measures must remain the residents of Narva, according to the register of population, for at least the entire period of support. 2. The jobs created by an entrepreneur through the acquisition or takeover of another business or part of it are not considered as new jobs. 3. In assessing of the newly created jobs all the enterprises associated with the entrepreneur are considered as a whole. 4. All the measures come into effect only when at least 10 new jobs are created for the registered residents of Narva. The exception is for rent-free providing of the industrial premises and equipment for the start-up entrepreneurs. 5. The economic principle of providing the support is based on the rule that the support provided for each individual company should depend on the additional income, which the local self-government receives as a result of creating new jobs, and should not exceed the size of this income.

General principles of support (2/2) 6. In those cases, where a long-term impact is observed and where a multiplication effect is strong, the amount of support is maximal. And vice versa – it is less in those cases, where the jobs are created, but the effect is short-term or the multiplication effect is negligible. 7. Those supporting measures, which foresee the direct monetary expenditures from the budget (cash benefits, mediator payment, compensation for utility costs), are performed only after the city budget receives the income tax for the accounting period from this enterprise, in minimal amount not less than the value of the monetary support. The actual amount of support is determined on the basis of the actual amount of the income tax payment into the city budget, in proportion to the rates set out by the measures and in accordance with a plan that a businessman has provided before the accounting period. 8. The main control method for the performance of the measures and the practical tool for determining the amount of support is the analysis of the Tax Department data on the change in the listed number of workers registered in Narva and the value of the income tax generated by them in the period preceding the application for the support and within the duration of the measures.

Target groups and types of support Monetary benefit Compen- sation for growth of rates Free rent of premises Free rent of equipment Support persons Free consulti ng Foreign manufacturing companies Manufacturing companies from other towns of Estonia Expanding Narva productions Starting-up industrial entrepreneurs Enterprises outside Narva Narva enterprises bringing the external money

All enterprises in or outside Narva, which create more than 10 new jobs for the residents of Narva and don’t belong to the trade sector An industrial enterprise, which exists or will act in Narva An enterprise, which is new for Narva Coming external enterprise Coming foreign enterprise Monetary benefit: 50% from the Tax in the years 1 and 2 Compensation of rates up to 30% from the Tax during 5 years Free rent of premises for 5 years Support persons for 3 years Free consulting Monetary benefit: 50% from the Tax in the years 1 and 2 Compensation of rates up to 30% from the Tax during 5 years Free rent of premises for 5 years Monetary benefit: 50% from the Tax in the years 1 and 2 Free rent of premises for 5 years + equipment Monetary benefit: 50% from the Tax in the years 1 and 2 Monetary benefit: 30% from the Tax in the year 1 and 20% from the Tax in the year 2 Monetary benefit: 20% from the Tax in the year 1 30% from the Tax in the year 2 Free rent of premises for 5 years & equipment Compensation of rates up to 30% from the Tax during 5 years Support persons for 3 years Free consulting Narrowing the target groups (selecting the most effective ones) ‏ Maximal support Minimal support Adding of support Adding of preferential factors

Supported: The support measures for entrepreneurs apply for the entrepreneurs that operate in the areas set by the Narva City Council, especially in the areas related to industrial and construction activities, namely:

Supported: Sphere of activityEMTAK Manufacture of food products - Manufacture of beverages, except alcohol - Manufacture of textiles - Manufacture of wearing apparel - Processing of leather and manufacture of leather products - Manufacture of wood and wood products, except furniture - Manufacture of paper and paper products - Printing and reproduction - Manufacture of coke and refined petroleum products - Manufacture of chemicals and chemical products - Manufacture of basic pharmaceutical products and pharmaceutical preparations - Manufacture of rubber and plastic products C10 C11 C13 C14 C15 C16 C17 C18 C19 C20 C21 C22

Supported: Sphere of activityEMTAK Manufacture of non-metallic mineral products - Manufacture of metals - Manufacture of fabricated metal products, except machinery and equipment - Manufacture of computer, electronic and optical products - Manufacture of electrical equipment - Manufacture of machinery and equipment - Manufacture of motor vehicles, trailers and semi- trailers - Manufacture of other transport equipment - Manufacture of furniture - Other manufacturing - Repair and installation of machinery and equipment Electricity, gas, steam and conditioned air supply - Construction C23 C24 C25 C26 С27 C28 С29 С30 C31 C32 C33 D35 F

Every entrepreneur has the right to present only one project. One or more supporting measures may be provided within one project.

Support measures for Entrepreneurs Monetary benefit for creation of new jobs The given support measure is provided for the period of 24 months Recipient of support Amount of support All enterprises 30% from the additional tax in the first year of the project 20% from the additional tax in the second year of the project Industrial enterprises 50% from the additional tax in the first year of the project 50% from the additional tax in the second year of the project

Support measures for Entrepreneurs Compensation for increasing of costs for heat and water supply services and sewage into the public water and sewage network The given support measure is provided for the period of 60 months In the case if the monetary benefit for creation of jobs is accepted Recipients of support Amount of support Foreign entrepreneurs and the entrepreneurs from the other towns of Estonia, who come to Narva up to 20% from the additional tax in the first year of the project up to 30% from the additional tax in the second, third, fourth and fifth years of the project.

Support measures for Entrepreneurs Compensation for increasing of costs for heat and water supply services and sewage into the public water and sewage network The given support measure is provided for the period of 60 months In the case if an Applicant refuses from the monetary benefit, the amount of support on compensation of growth in the cost rates increases to the following values: Recipients of support Amount of support Foreign entrepreneurs and the entrepreneurs from the other towns of Estonia, who come to Narva up to 50% from the additional tax in the first year of the project. up to 60% from the additional tax in the second, third, fourth and fifth years of the project.

Support measures for Entrepreneurs Providing a service of a support person The recipients of the given measure are the foreign enterprises coming to Narva. The amount of the support depends on the planned number of new jobs for residents of Narva. The support measure is provided for the period of up to 36 months The planned number of jobs Amount of compensation for the support person service from 50 to 99 from 100 to and more ЕЕК/month (about 320 EUR/month), during 3 years; ЕЕК/month (about 510 EUR/month), during 3 years; ЕЕК/month (about 767 EUR/month), during 3 years.

Besides, the following support measures are planned:  A benefit for mediation in bringing a foreign enterprise into Narva.The amount of the benefit will be linked to the amount of additional tax coming from the business activity of the enterprise.  A special support person will be assigned for a foreign enterprise at the expense of the city, whose task it is to interact with local and state authorities on behalf of the enterprise. This measure is intended for the businesses that create over 50 jobs. The support persons may be chosen from the consultants on entrepreneurship, which are accepted by the City.  Free counseling on obtaining of funds from the EU Structural Funds. Depending on the size of the enterprise the amount of consulting may be from 10 to 40 hours. The counseling may be performed with the resources of SA Ida-Virumaa Tööstusalade Arendus (The foundation Ida-Virumaa Industrial Areas Development).

Besides, the following support measures are planned:  To provide a free rent of municipal industrial areas at Linda 6. Additionally to this measure to provide a free rent of metal-working equipment transferred to the City from the part of the Cargotec Estonia AS together with the building at Linda 6.

Another measure of support for the starting enterpreneurs is co-financing from the city budget for the projects aimed to start-up of business activity. Amount of the benefit: up to kroons and not more than 25% from the total sum of the project. “The order of appropriation of funds for co- financing of the projects of starting up entrepreneurs”. Approved by the Resolution of the Narva City Council no. 25 from

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