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Finland Must Lower Tax To Compete Say Business Leaders

by Ulrika Lomas, Tax-News.com, Brussels

13 November 2003


Taxation was named as corporate Finland’s biggest business issue by the chief executive of the nation’s largest energy company at a seminar this week, where business leaders warned that the economy is at risk from high taxation.

"I think that we've seen a few companies move out of Finland recently," said Mikael Lilius, head of energy firm Fortum Oyj. "We've certainly not seen any new companies move into the country, and in the long run it's important to stimulate a competitive environment," he added.

The taxation issue is particularly timely at the moment as the government is due to make a decision this month on whether to lower the country’s flat rate of corporate tax, levied at 29%. It is also prescient given neighbouring Estonia’s corporate tax rate of 26% to 27% which has led many Scandinavian firms to locate their headquarters in the Baltic state. 26.9% of Estonia's foreign direct investment originates from Finland according to the Wall Street Journal.

"The fact that we've got a growth-oriented, low-tax economy 18 minutes away by helicopter where people speak Finnish is undoubtedly attractive," said Bjoern Wahlroos, CEO of Finland’s largest insurance firm, Sampo Oyj.

He adds: "The point is that Estonians encourage us to come over and grow our business, saying we'll take only a very small slice," Wahlroos said.

In common with Finland, Estonia is currently considering lowering corporate tax - to a rate of 20%.


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