Sweden To Cut Corporate Tax

by Ulrika Lomas, Tax-News.com, Brussels

10 September 2008

Swedish Prime Minister Fredrik Reinfeldt announced on Monday that a cut in the rate of Sweden's corporate tax will form the centrepiece of an autumn budget which aims to relieve tax and administrative costs on businesses operating in the country.

In a pre-budget announcement, the government revealed its plans to cut corporate tax to 26.3% in 2009 from the current rate of 28% in a measure that will cost SEK7bn in revenues (EUR739mn).

Sweden's corporate tax has remained static at 28% for 13 years, and while it used to be one of the more competitive rates in Europe, the recent trend towards lower corporate tax rates means that the current rate now stands well above the EU average rate of 23.2%.

In another measure designed to cut costs for businesses, the government will lower the rate of employer social security contributions by 1%, and put in place incentives for companies to hire more young workers.

The government also plans to announce other economy-boosting measures in its budget announcement, due to be made on September 22, including personal income tax cuts.

According to the government's calculations, the total cost of the tax package will be SEK16bn, but it expects to recoup revenues by closing several tax loopholes and clamping down on tax evasion.

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