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Corporate Tax

Finland to cut corporate tax rate from 24.5pc to 20pc

The move follows recent cuts by Sweden and Denmark.

FINLAND PLANS TO cut its corporate tax from 24.5 to 20 per cent, following in the footsteps of neighbouring Denmark and Sweden, Prime Minister Jyrki Katainen has announced.

The government said the tax cut would be partially financed by higher taxes on stock dividends, alcohol, tobacco and sweets, as well as a reduction of business subsidies.

The tax cut was announced at a press conference at which Katainen also disclosed measures aimed at reducing Finland’s budget deficit.

Sweden cut its corporate tax from 26.3 to 22 per cent on 1 January, while Denmark last month presented a growth package calling for a progressive reduction in corporate tax from 25 to 22 per cent.

The Finnish government’s plan deficit cutting plan calls for savings of €600 million, half of which will be spending cuts and half of which will be financed by the higher taxes.

Finance Minister Jutta Urpilainen insisted that the cuts would not hurt the country’s generous welfare state.

“Social security will not be impaired,” she said.

Finland’s broad coalition government, in power since 2011, already introduced a five-billion-euro savings plan in 2011 and 2012.

In December, the government said it expected a budget deficit of 1.5 per cent of gross domestic product in 2013, and said it aimed to put an end to rising public debt in 2014.

The Nordic country, the only member of the eurozone to hold a triple-A credit rating with a “stable” outlook at all three international credit rating agencies, saw its economy shrink by 0.2 per cent in 2012.

- © AFP, 2013

Read: Cyprus parliament to vote on plans to ‘armour the banking system’ >

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