ARTICLE · 31 MARCH 2005

Tax Reform 2005

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The most significant changes in the Finnish tax system in the past ten years became effective on 1 January 2005.

FinlandTax

General

The most significant changes in the Finnish tax system in the past ten years became effective on 1 January 2005. First, the imputation credit system (avoir fiscal) was abolished and replaced by a partial double taxation of distributed profits. Further, the corporate tax was reduced and the capital gains on disposals of shares for corporate entities were exempted with certain qualifications. The following summarises the changes in respect of corporate taxation and dividend taxation where a company is receiving dividends.

New corporate tax rate

Characteristic features of the Finnish corporate taxation include a broad tax base and relatively low nominal tax rates. This will continue. The corporate income tax rate was reduced to 26% as of 1 January 2005.

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