CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. OECD Advises Finland On Growth-Friendly Tax Reforms

OECD Advises Finland On Growth-Friendly Tax Reforms

by Ulrika Lomas, Tax-News.com, Brussels

02 August 2016


A revenue-neutral modification of Finland's tax structure could boost the nation's economic growth, the Organisation for Economic Cooperation and Development said in a recently released report.

Finland has already adopted some measures to make the tax structure more growth friendly in recent years, the report, Boosting Productivity in Finland, said. These measures include lowering the corporate income tax rate from 26 percent to 20 percent in three steps between 2011 and 2014, with the aim of maintaining an attractive business environment. In addition, the share of indirect taxes in the tax mix has increased, with hikes to both value-added tax (VAT) and excise duties. Meanwhile, recurrent taxes on personal immovable property have increased, but these remain relatively low.

Despite the recent reforms, the tax structure can be improved further, the report said. The report pointed out weaknesses in the current tax structure, advocating a review of reduced VAT rates on some categories of products, which increase the burden of compliance and reduce revenue substantially. In addition, taxation on labor remains high by OECD standards, says the report, weakening work incentives for individuals and incentives for employers to hire workers.

The report adds there is also a case for reducing the many tax expenditures, as these create complexity in the tax system, are often poorly targeted, and risk being used to circumvent government spending limits.

The OECD noted that the Finnish Government has announced a reduction in labor taxation, notably through an increase in the earned income deduction focusing on those on low and medium incomes. In addition, excise duties and recurrent taxes on personal immovable property, which are less detrimental to growth, will increase. The deduction of mortgage interest rate payments from taxable personal income will be reduced further. Some reforms to taxation of entrepreneurship, ownership, and investment are also planned. This includes easing the inheritance tax, which would however entail revenue losses and increase inequality, the OECD said.

TAGS: individuals | inheritance tax | environment | compliance | VAT rates | tax | investment | economics | business | value added tax (VAT) | property tax | interest | fiscal policy | entrepreneurs | Organisation for Economic Co-operation and Development (OECD) | Finland | tax reform | standards

To see today's news, click here.

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 











Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »