Estonian president says a lack of ‘special conditions’ for tech giants has allowed local start-ups to thrive

Estonia’s tech companies have been able to thrive in the absence of large multinationals like Facebook and Microsoft, the country’s president told CNBC.

Home to just over a million people, Estonian founders have produced several tech firms with multibillion-dollar valuations. Skype, which was sold to eBay and then Microsoft, is the most well known, while others include recently listed currency exchange app Wise and mobility app Bolt, which is backed by Silicon Valley VC heavyweight Sequoia.

President Kersti Kaljulaid said that multinationals have traditionally set up their overseas headquarters in countries with generous tax systems, adding that Estonia has never been a tax haven.

Facebook, Google and Apple all employ thousands of people at their European headquarters in Ireland, where the corporation tax is 12.5%. In Estonia, it’s 20%. The tech giants also employ thousands of staff across other European countries including the U.K. and Switzerland, but they don’t have a significant presence in Estonia.

“Estonia is a country that has never offered special deals or special treatment to any kind of company,” Kaljulaid said in an exclusive interview last week. “When I was advising the prime minister 20 years ago, everybody always came and asked what are your special conditions? We said none and I think it has served us right.”

She added: “This probably, might be, one of the reasons why Estonia has so many homebred start-ups from which you now see unicorns coming out more often.”

Estonia has developed a reputation for being one of the most technology-friendly countries in the world, with the government moving many processes online well before other nations. It has embraced online voting and digital IDs, for example, and free wi-fi is widely found across the country.

Kaljulaid said the country’s leaders want to make sure Estonia’s legal space is safe but permissive for new technologies like the grocery delivery robots that have been built by Starship Technologies, which was set up by Skype co-founder Janus Friis.

Kaljulaid said the nation’s entrepreneurs and coders have been educating politicians on the technologies that are poised to change the world.

For example, Skype co-founder Jaan Tallinn has been teaching her and others all about artificial intelligence.

“In Estonia, he [Tallinn] is well known as somebody who warns us and informs us,” she said. “He’s worried, but not unnecessarily.”

Tallinn told CNBC that he has one major concern when it comes to AI.

“AI is still fairly domain specific and fragile,” he said. “The one big concern I have is that countries will start applying more AI to a military context.”