Finnish Government To Boost Forestry Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

16 September 2008

The Finnish government has proposed additional tax exemptions for the timber trade with new measures designed to make forest conservation more attractive by means of tax relief.

According to the Nordic Forest Owners' Associations, it has emerged from the government's budget session that forest sales to the state for nature preservation purposes will become exempt from capital gains tax. Sirkka-Liisa Anttila, Minister of Agriculture and Forestry, believes that this measure will substantially increase sales of protected areas.

It is unclear when the new measure will be put into place, but it is expected that the proposal will be contained in the government's budget statement later in year, before being introduced into parliament.

The new proposal follows the government's decision in July to grant a temporary tax exemption for timber sales from forest thinning to the end of August, and a 50% exemption to the end of 2009.

The tax relief was granted as a result of a long-running disagreement between Finland and Russia which was initially sparked when Russia announced plans to increase export duties on lumber by EUR50 per cubic metre by 2009.

This prompted a strong reaction from Finland, whose paper producers buy the majority of their lumber imports from Russia, and were facing the prospect of paying double the price for their materials.

The Nordic Forest Owners' Associations has reported that this measure resulted in record sales in August, with the quantity of timber sold from private forests reaching a record 5.3 million cubic metres.

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