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Finland: Finnish government considers new tax incentives

In October 2011, major Finnish trade unions and employers’ organisations agreed on the conditions of a new framework agreement. To support the tendencies of both parties, the Finnish government made suggestions regarding amendments in corporate and individual taxation.

The intention of the government was both to support the competitiveness of the Finnish industry and to improve employment and purchasing power. The suggestions were made in addition to the recent government’s Bill relating to the budget for 2012, suggesting several changes in different tax areas. It has already been suggested that the Finnish corporate income tax rate be decreased to 25% as of the beginning of 2012. Now the Finnish government has suggested a further decrease of 0.5%, which would reduce the corporate income tax rate to 24.5% from the start of next year. Personal income taxation will be less to compensate for the rise in employee pension payments. The government would also cancel the suggested increases in unemployment insurance contribution rates.

To support companies operating in energy-intensive branches, the government suggested the energy taxation be lowered by the implementation of an energy tax cutter at the beginning of 2012. In addition to that, the government announced it would conduct research relating to the possibility of implementing a R&D tax incentive system or a tax incentive system for start-up companies. The objective of the government is to implement the tax incentive system in the beginning of 2013.

The suggestions made by the Finnish government are provisional; the realisation of which depends on the budget and labour negotiations. Possible changes in Finnish tax legislation may enter into force at the beginning of 2012.

Janne Juusela (janne.juusela@borenius.com)

Borenius – Taxand

Tel: +358 9 615 333

Website: www.borenius.com

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