TAX NEWS - June 2010

Finland Tax: Working group proposes tax cuts for income and corporation tax

The working group on tax reforms proposed cutting corporation tax from the current 26 per cent to 22 per cent, according to a statement by the finance ministry on Monday. Led by Martti Hetemäki, the working group also proposed changing the emphasis of taxation away from tax on work and towards tax on consumption.

In addition, a two per cent increase in both the lowered VAT and normal VAT tax rates should be implemented according to the proposal. Hetemäki and his working group are to continue working on tax reform until the end of the year and are expected to return to the VAT issue in their final report.

The proposed reforms are aimed to reduce incentives to change earned income into income for capital.

A major concern for the working group is that the aging population will increase the pressure to tighten taxation.