Finnish Prime Minister Sanni Marin’s 2022 budget proposes several tax provisions impacting corporations with an aim to encourage investment and economic growth in the country, as reported in a September 9 release from the Ministry of Finance.
The budget also concurrently seeks to raise additional tax revenue through measures directed at expanding the tax base and combating tax avoidance.
The proposals include new support for research and development (R&D) activities through an additional tax deduction of 150% for certain R&D expenditures in 2022–2027. The deduction would be available for R&D expenditures based on R&D cooperation between companies and research organizations.
To further support investment, the budget would also extend the temporary double depreciation rules for machinery and equipment to 2024–2025.
In addition, the proposals would revise transfer pricing adjustment provisions to align with OECD transfer pricing guidelines. The transfer pricing changes would take effect beginning in 2022.
To combat aggressive tax planning, the proposals would further amend the limitation on the deductibility of interest expenses, restricting the application of the balance sheet exemption beginning next year. The change is intended to prevent the transfer of taxable income outside of Finnish taxation in private equity structures.
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