Tax evasion costs Finland at least three billion euros annually, reports the online financial newspaper Taloussanomat.

“Finns evade taxes through the use of foreign bank accounts, businesses based in tax havens and the book-entry register (hallintarekisteri). According to last year’s estimate by the Finnish Tax Administration, the underground economy costs Finland about five per cent of its GNP or about nine billion euros. Finland loses about three billion euros or nearly four per cent of its tax revenue every year because of tax evasion.”

“Despite their estimates, the authorities have no exact data about tax evasion cases or the financial value of said cases. Many cases do surface, according to Senior Inspector Hannu Kuortti of the Tax Administration, but it is hard to estimate the full extent of tax evasion or the total number of cases.”

“According to international research institutes, tax evasion has increased worldwide during the last few decades. The reason for this is clear. In the era of free movement of capital, transferring sums of money from Helsinki to a region such as the Isle of Man requires only a few clicks of a mouse.”

“It is possible to evade taxes in many different ways. One of the most typical procedures involves working in Finland under a company registered abroad and leaving the proper taxes unpaid.”

“Another typical way of evading tax is double invoicing, which is practiced in the trade with Russia. In this method the company changes the value of the exportable product in order to cut customs costs.”

“The third method of tax evasion, especially with regards to stock investments, involves working abroad under the so-called book-entry register. It was created right before the recession in 1991. Instead of the person owning shares abroad, it registers the body that administers said shares.”

TALOUSSANOMAT 22 August. Matti Niemi