The government of Finland is cutting the corporation tax rate to 20% from the current level of 24.5%. The new corporation tax rate was announced as part of a budget framework review on central government spending limits for 2014-2017, and will come into effect from the beginning of 2014.
The lower corporation tax rate is intended to boost employment and economic growth, which are seen as the key to meeting the challenges faced by the country’s public finances. The government has also decided to cut some subsidies and grants to companies and to increase the taxation of dividends in order to compensate for the loss in corporate tax revenues.
According to the government, the reform of the taxation structure is geared to promoting investments, streamlining the taxation system, easing the administrative burden and eliminating potentially adverse tax planning. The central government revenue base will be strengthened by increasing excise duties on products with adverse health effects, such as alcohol, tobacco, sweets and soft drinks. VAT rates will not be increased.
The measures agreed by Finland’s six-party coalition government are intended to turn the increase in Finland’s debt ratio into a decline at the end of the electoral term. The amount of the net adjustment will be about EUR 600 million in 2015.
Source: Government of Finland