Finance Ministry considers allowing deferment of corporate taxes and employer fees
Finance Minister Katainen: postponed payments would incur interest
The taxation department of the Ministry of Finance is looking into the possibility of granting companies the possibility of deferring payment of corporate taxes and other mandatory fees in order to keep viable businesses solvent during the current economic crisis.
Minister of Finance Jyrki Katainen (Nat. Coalition Party) told Helsingin Sanomat on Wednesday that such a move is under consideration. “No decisions have been made yet, but we are currently examining the need for reform and ways to implement it”, he said.
Also being considered is a change to the system of balancing out corporate losses in such a way that losses could be deducted from taxation retroactively, and that the deduction could be granted as a repayment of money. This carry back system is used in a number of member states of the European Union as a stimulus measure. In the UK, France, Norway, Ireland, and The Netherlands, it is a permanent feature.
Lifting of the Social Insurance Institution (KELA) contribution has already been implemented in Finland. Changes have also been made to the system of corporate write-offs.
Katainen says, nevertheless, that the current situation is so serious that new measures have to be considered.
“Unnecessary failures of companies should be averted”, Katainen emphasises.
One possibility mentioned by Katainen is the model that was adopted by Sweden in March, in which a company can defer taxes and other mandatory payments for three months. The resulting debt carries an eight per cent interest.
Katainen feels that any deferred payment must be liable for interest. He feels that the amount charged in Sweden is rather high, but he does not want to say what the rate should be in Finland.
Katainen says that the possibility to defer payment should apply to all companies.
More payment time would not be allowed if it appears obvious that the company in question cannot be salvaged. Flexibility would be extended companies that are going through temporary difficulties, but which seem viable in the longer term. “That is why it is also justified to charge interest”, Katainen explains.
Proposals for help from the Ministry of Finance were made by the Federation of Finnish Enterprises and the Confederation of Finnish Industry (EK).
“Now we need rapid action to save healthy companies, and to keep them afloat past the worst of the times”, says EK managing director Leif Fagernäs.