Effective as of January 1, 2010, the reporting and paying of value added tax in Finland will change due to the implementation of the new tax account regime proposed by the Finnish Government. The amendment needs still to be passed by Parliament.
Involving several amendments to the Finnish tax legislation the new system, in addition to the value added tax, will at first cover most of the other unprompted taxes i.e. withholding tax. Later it will be extended to cover all the taxes levied by the Finnish tax authorities.
Due to the amendments, the Finnish tax authorities will begin, as of January 1, 2010, to keep a taxpayer specific account of taxes subject to the new regime. The tax account will include data of all entries on the account, balance of that account, unsettled taxes and unused payments. A statement of that account will be issued by the tax office to the taxpayer on a monthly basis. Future amendments to the tax account system will bring to the taxpayer a possibility to access the data on the tax account also by internet.
All taxes subject to the new regime must be reported and paid by the new unified statutory deadline. In respect of VAT, the reporting and payment due dates will move forward by three days from their current closing date.
Not only will the date of reporting and payment be unified. All the taxes subject to the new regime are paid by a single payment. Thus, instead of making separate payments for value added tax and e.g. withholding tax one makes a single payment that covers payments to all taxes subject to the new regime.
Penalty regime applicable to late payments will change as well. Currently different penalty rules apply across most of the unprompted taxes. These rules will be unified, which should make it easier for the taxpayer to estimate their costs which will result from late payment.
Foremost the new regime will alter the procedures relating to the VAT refunds. In view of the single payment of all taxes subject to the new regime, the negative monthly VAT will now be offset against other payable taxes included in that payment. If the negative VAT can not be totally offset, the excess is refunded to the taxpayer each month. This will be contrary to the current situation where, as a main rule, the negative VAT must be carried forward to the next month during the financial year. The new regime should thus hasten the recovery of negative VAT and should also abolish the need for separate VAT refund applications.
Introduced simultaneously to the VAT Package the new tax account regime may entail some further challenges to the financial management of the companies. On the whole these changes, however, generally avail the taxpayer, given above all the benefits in recovery of negative VAT.
Further information:
Jukka-Pekka Kankaanpää
Tel. 020 760 3527
e-mail: firstname.lastname@kpmg.fi