YRITTÄJÄ, tule mukaan omiesi pariin! Liity Yrittäjiin.
VAT increase was particularly hard on solo entrepreneurs and small employers
The VAT increase last autumn made many businesses’ situations more difficult, a recent Yrittäjägallup survey shows.
Only just over half (58%) of SMEs were able to raise their prices because of the VAT increase, the recent Yrittäjägallup survey shows.
“The VAT increase worsened many SMEs’ situations and played its part in accelerating the decline in the number of business owners and worsening companies’ difficulties. It was an unfortunate decision for solo entrepreneurs and small employers,” says Mikael Pentikäinen, CEO of Suomen Yrittäjät, the Finnish SME association.
The general VAT rate rose from 24% to 25.5% in September 2024.
The Yrittäjägallup survey attracted responses from 1,128 SMEs between 12 and 19 March. Of the respondents, 45% were single-person business owners.
Specialists in a bind
The groups least able to raise their prices as a result of the VAT increase were specialist services (50%) and solo entrepreneurs (45%).
One in four SMEs saw their sales decrease. For 60%, sales remained at the same level.
The groups which most frequently reported decreased sales were retail (35%) and business owners in Uusimaa outside the capital region (32%). The smallest decrease in sales was reported in specialist services (14%).
“The tax increase had an extensive effect on small business and particularly on retail, which has faced difficulties in other ways, too. The increase ate into growth and weakened already weak profitability. In the retail sector, one business in four is in a poor financial situation,” SY CEO Pentikäinen says.
One third reported weaker profitability as a result of the VAT increase (34%). For most (57%), profitability remained on the same level. The groups reporting lower profitability most frequently are in retail (48%), business owners in Uusimaa but outside the capital region (40%) and woman business owners (37%).
“In terms of the economic cycle, the tax increase was also badly timed. We understand the state of public finances, but the Government also has to understand that tax increases generally have negative impacts,” Pentikäinen says.
Number of business owners falling
The number of business owners has fallen drastically in recent years. The number of employer business owners has fallen by 22% since 2021, while the total number of business owners has fallen by 12%. The numbers of woman business owners has fallen in particular. They are just 31% of business owners.
“This is the result of many factors, and the VAT increase last autumn is one of them. The poor economy, inflation spike, health service problems and increased YEL payments have also contributed.”
How the survey was conducted
The Yrittäjägallup entrepreneur survey was carried out by Veriana on behalf of Suomen Yrittäjät.
The survey attracted responses from 1,128 SMEs between 12 and 19 March. The confidence interval for the results is +/- 2.9 percentage points.
Read the results in more detail here.
Are you a Suomen Yrittäjät member yet? Read more about member benefits and advantages!
