FINLAND is the 88th best country in the world at keeping business and tax information under wraps, indicates the Financial Secrecy Index 2022.
Finnwatch, a Finnish non-governmental organisation that investigates the impacts of business activities, stated last week that the country has a lot to do to improve the transparency of business ownership data and requirements of tax reporting.
The organisation reminded that shortcomings in business and tax transparency increase the risk of corruption and form an obstacle to investigating money laundering and tax evasion. Finland fared poorly in the index in terms of the transparency of business ownership data, as the register for beneficiary information is not open to everyone and only holds information on the largest shareholders of businesses.
This, it said, has made it challenging to trace the wealth of oligarchs subjected to economic sanctions over the Russian invasion of Ukraine.
“In Finland, investigative journalists and non-governmental organisations have to apply for a permit to obtain information from the register for beneficiary information. The register is also difficult to use: to obtain information, you really have to know in advance what you are looking for,” told Saara Hietanen, a tax specialist at Finnwatch.
Finland was criticised in the report also for the fact that requesting the financial statements of businesses from the trade register is not free and that court-issued tax decisions are not fully public or available for a fee. Companies in the country are also not required to issue comprehensive country-specific tax reports that would further clarify their tax contributions and other key indicators.
Finnwatch, unlike the index, also questioned the sufficiency of the country-specific reporting obligations of state-owned companies.
“The reporting requirements targeted at state-owned companies have serious shortcomings and, in spite of promises, the renewed reporting model has still not been published,” lamented Hietanen.
Finnwatch told that current public income data only accounts for 74 per cent of all capital income, meaning some 3.4 of the 13.3 billion euros in capital income reported in 2019 were not reflected in public data. This distorts public income data especially because capital income, including tax-free capital income, is most common in high income brackets.
When public tax data does not incorporate tax-free income, citizens may be left with the wrong impression about actual tax rates.
“The problem is luckily easy to fix, as the tax administration already has information on tax-free capital income. It is simply a question of will there be the political will to increase transparency,” said Hietanen.
Finland has dropped 17 places – that is, improved its ranking – in the 141-country index since 2018. Compiled annually by the Tax Justice Network, this year’s index was topped by the United States, Switzerland, Singapore, Hong Kong and Luxembourg. The least secretive countries in the world, by contrast, were Montserrat, San Marino, Nauru, Gambia and Slovenia.
Aleksi Teivainen – HT