The current broad tax base policy and measures to combat tax avoidance coupled with low/moderate tax rates will continue. There will be changes in taxation concerning both private individuals and companies and in general, the taxation of earned income will be decreased.
The corporate income tax rate in Finland has been 20%, and it will be kept at this competitive level. As the government’s target is to support entrepreneurship, there will be a new 5% deduction for all other than limited liability companies. Tax reliefs in changes of generation will be broadened.
The above-mentioned tax decreases will be financed by increases in certain taxes. For example real estate tax, tobacco tax, sweet tax and taxes relating to energy and use of vehicles.
Changes will occur in how losses are deducted. The current distinction between different sources of income will be alleviated by allowing losses from one source to be set off by profits from other sources of income in limited liability companies, and allowing capital losses to be deducted from all capital income. Up until this time capital losses were deductible only from capital gains.
The new tax policy introduces a possibility to offer share or option incentives to key employees in non-listed companies with lower values compared to private equity investors without tax consequences.
Measures for combating grey economy and tax avoidance will be further strengthened and as a new feature, the government will introduce a tax amnesty for declaring previously undeclared income on tax payer’s own initiative.
There are several important issues which need to be further evaluated, for example, the introduction of a new reserve for supporting investments; aligning the dividend taxation of companies listed on the First North with non-listed companies; and, introducing tax-exemption for dividend income up to EUR 500.
The emphasis of taxation will be moved from taxation of employment and entrepreneurship to environmental protection taxes. Even though the government has introduced some new features for taxation, the effect on taxpayers will be unremarkable.