Legislative amendment makes it easier to determine tax liability of foreign companies

NordenBladet — On 18 November 2021, the Government submitted to Parliament a proposal to amend the Accounting Act. The amendment aims to make it easier for Finnish authorities to determine whether foreign companies have business activities in Finland and whether they are liable to pay taxes in Finland.The purpose of the Government’s proposed amendment to the Accounting Act is to give the Finnish tax and customs authorities the right to access the accounting records of foreign companies. The proposal, which is based on the Government Programme, is an important tool in combating the grey economy as regards the activities of foreign companies. In practice, the legislative reform puts foreign companies in the same position as Finnish companies in terms of the authorities’ access to information.”It is important that Finnish and foreign companies are treated equally with regard to the accounting obligation and taxation. This reform is an essential measure in combating the grey economy,” says Minister of Employment Tuula Haatainen.As per the proposed amendment, a foreign company is obliged to keep accounts if it carries out business activities in Finland or its business activities abroad are in fact managed from Finland. In such a situation, the accounting information can be used as a basis for the company’s taxation in Finland. Various stakeholders and experts have been consulted during the legislative drafting. The reform is considered good and necessary and it is expected to enter into force as soon as possible.

Source: Valtioneuvosto.fi