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Government positions on efforts to combat tax evasion and on increasing public reporting by companies

Government Communications Department
Publication date 9.5.2017 10.18
Press release 221/2017

Finland works actively in international cooperation against tax avoidance, and domestic legislation on this topic is under preparation. Legislation also ensures that the authorities receive information on how the largest international corporations pay taxes in various countries. Finland also supports projects relating to public reporting by companies.

On Tuesday, 2 May, the Cabinet Committee on Economic Policy adopted a political position on work to combat tax evasion and aggressive tax planning and on measures taken by Finland. The Cabinet Committee also adopted a political position on increasing the reporting of companies’ income tax information.

With these positions, the Government wants to underline the importance of openness and responsibility in the operations of companies. The principle of openness increases citizens’ possibilities to evaluate the operations of companies and creates an equitable business environment for various companies.

Legislation is a means to combat tax avoidance

The Government considers it highly important to maintain and implement measures to combat tax avoidance and aggressive tax planning both in Finland and internationally. The Government is strongly committed, both nationally and internationally, to working against tax evasion and aggressive tax planning and to implementing legislation to prevent this.

At present, Finnish legislation includes provisions both on the taxation of income from international enterprise operations and on combating tax avoidance and aggressive tax planning. In recent years, important steps have also been taken internationally to prevent tax avoidance and aggressive tax planning.

International cooperation in these matters is essential. Finland has participated in this cooperation closely both in the EU and in the OECD, the Organisation for Economic Co-operation and Development.

Effort has also been made to affect the taxation of international operations by increasing the tax authorities’ rights to receive information and intensifying the exchange of information. Within the EU, the exchange of information on the operations of companies has been increased, for instance, by passing laws on the automatic exchange of preliminary rulings between Member States.

The OECD and G20 countries have agreed on the country-specific reporting of company information to the authorities and on automatic exchange of information. Finland has implemented the relevant EU Directive by passing laws that entered into force in the beginning of this year.

On the basis of national and international measures, Finland already has in place recent provisions and procedures that improve the possibilities to tax income generated in Finland. Several laws on the prevention of tax avoidance are currently under preparation.

Company profits must be taxed where they are generated

The Government holds the view that the profits of companies must be taxed where they are generated. The Government also considers that other measures strengthening equitable competition between companies are important.

When companies report openly on certain aspects of their income taxation and tax payments, their operations can be assessed publicly. The Government regards this as one element of equitable competition and corporate social responsibility.

The Government is strongly committed to promoting the tax reporting and openness of companies in order to ensure that these objectives are met.

Tax reporting and openness are discussed in international cooperation within the EU. Finland takes an active part in this work. Finland supports the drafting of international agreements and measures that promote these objectives, and shall implement them effectively. With respect to obligations, Finnish companies must have a level playing field with their competitors.

The positions in full

The Government’s political position on work to combat tax evasion and aggressive tax planning and on measures taken by Finland
The Government’s political position on increasing the reporting of companies’ income tax information 

Inquiries: Financial Counsellor Jari Salokoski, tel. +358 295 530 437 and Special Adviser Leena Aine, tel. +358 295 530 032, Ministry of Finance, and Under-Secretary of State Tuomas Pöysti, tel. +358 295 163 012, Ministry of Social Affairs and Health