Finnish companies in the vortex of international tax reforms

Finnish companies in the vortex of international tax reforms

The current international corporate tax system has largely been considered outdated and at the end of its lifespan. The main reason behind the need for reform stems from the basic structure of the system, which was designed a hundred years ago and has become uncapable to respond to challenges posed by new business models. An increased role of digital companies has proved particularly problematic in cases where a multinational company has at the same time significant value-added activities but not permanent establishment in the country, and thereby neither a tax liability.

Numerous tax reforms have been proposed, especially by the OECD and the EU, but no broad consensus has been reached. The most recent of the proposals is the EU’s BEFIT proposal, which proposes the implementation of the OECD’s two-pillar reform

  1. for taxing the profits of digital services providing companies, and
  2. the introduction of a minimum tax rate advocated by the G7 countries.

This research project examines the consequences for the Finnish business sector of moving to tax models based on corporate group taxation. The goal of the project is to increase understanding of features of corporate group -based reforms that are particularly important from the perspective of Finnish companies. The key question deals with how the BEFIT proposal would affect the tax treatment of Finnish companies: how the reform would treat different companies and how the results will change as a response to different details.

The research questions of this project are following:

  1. How would the corporate group -based tax reforms affect the tax burden on Finnish companies?
  2. How do the tax burden changes differ between different companies/corporate groups?
  3. Which are the most favorable features of tax models from Finland’s point of view? And which are the most harmful features?
  4. What kind of corporate group -based tax reform would be the most lucrative from Finnish perspective?


Etla implements the research project in cooperation with VATT Institute for Economic Research.

Responsible for research: