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No reduction in corporate tax recommended

No reduction in corporate tax recommended

An expert group appointed by the government did not find any reason to reduce the corporate tax at this moment terming the country´s business taxation system competitive internationally.
The expert group on business taxation set up by the Ministry of Finance submitted its report, which, however, propose changes to the taxation of dividends and earned income, with the intention of increasing the efficacy of taxation, said an official press release.

The expert group’s proposals are aimed at promoting neutral taxation that will not influence taxpayers’ choices.

This will be an effective way of enhancing productivity and economic growth.

In Finland, limited liability companies and other corporate entities pay 20 per cent corporate income tax on their taxable income. This is less, on average, than in the other Nordic and EU countries.

The expert group considered the corporate income tax rate to be competitive and sees no immediate need to reduce it.

Finland should nevertheless ensure that the corporate income tax rate remains at an internationally competitive level in future years, too.

The expert group regards the current company taxation model to be justified. The experts do not, for instance, put forward the ACE and CBIT models that have been a focus of international debate and which aim to remove differences in the tax treatment of equity and debt finance. Neither were there found to be justifications for adopting the Estonian model of business taxation.

It also concluded that there is no reason to amend the provisions concerning calculation of the taxable income of businesses. The experts do not propose the introduction of a tax incentive for research and development or the use of a profit equalisation reserve or investment reserve.