Business taxation

Suomen Yrittäjät is the voice of SMEs in the debate on taxation policy. The tax system should support enterprise, business expansion and employment. SMEs are considered the source of an increasingly large share of economic growth, jobs and investments: this is why their voice must be heard.

Development of taxation must ensure that the system continues to encourage entrepreneurial risk-taking. The total taxation of the business and the business owner is particularly decisive for SMEs, which highlights the importance of dividend taxation, a form of taxation which takes risk into account. Suomen Yrittäjät has lobbied strongly and successfully against initiatives to raise taxation of unlisted limited companies’ dividends.

Taxation should encourage all types of business. Suomen Yrittäjät demanded the introduction of an entrepreneur tax credit when the corporation tax rate was reduced in 2014. The five per cent entrepreneur tax credit has been in force since 2017. Sole traders, and partnerships consisting of natural persons or estates can benefit from it. Retaining this tax credit is important, as it encourages enterprise and provides livelihoods for small business owners.

Good economic and taxation policy are needed to promote smooth ownership changes. Finding new owners for existing businesses is important for all of Finland. Successful changes of ownership secure jobs and allow businesses to grow under new management. In addition to employment, changes of ownership also matter in keeping local communities vibrant. Taxation must not prevent or frustrate businesses changing hands.

The lower VAT threshold must be raised further. The threshold at which a business begins to pay VAT was raised on 1 January 2021 from €10,000 to €15,000 in turnover. Suomen Yrittäjät believes that this was a step in the right direction, but that the threshold needs to be raised further to €20,000. The upper limit for incremental VAT relief should be increased from the current €30,000 to €50,000. Raising the limits would make running small businesses easier and encourage people to start and expand businesses to beyond the current VAT thresholds.