Finnish Profits Flow Abroad, Leaving Tax Revenue in the Lurch
In a striking report, Hufvudstadsbladet has drawn attention to a concerning trend: the profits generated by companies operating in Finland are largely being siphoned off to foreign entities.
The headline reads ominously, “Uber will never pay taxes in Finland.” While ride-hailing services like Uber and Bolt offer low fares and convenient options for consumers, the long-term implications for the Finnish economy could be severe. The paper argues that the profits generated by these companies will ultimately escape the country, depriving Finland of vital tax revenue.
To delve deeper into this issue, Hufvudstadsbladet spoke with Timo Puiro, a tax administration veteran with over two decades of experience. Puiro has also contributed to the development of global taxation frameworks for tech giants at the OECD. His perspective paints a grim picture: platform companies, he contends, are hollowing out Finland’s tax base. Many of these firms secure hefty loans from subsidiaries based in tax havens, subsequently repaying them with high interest rates—an arrangement that effectively eliminates any substantial taxable profits within Finland.
“They will never generate significant taxable income here—now or in the foreseeable future,” Puiro told the newspaper. Instead, it is the Finnish taxpayers who bear the brunt of this predicament. As a significant portion of the economy becomes increasingly dominated by global entities, Puiro warns that the repercussions will be felt in the form of heightened income taxes and reduced pensions for Finnish citizens. Notably, companies like Facebook and Google pay no taxes on the profits they accrue from Finnish users.
Unemployment: A Growing Public Crisis
In another critical area, Helsingin Sanomat highlights the plight of unemployment, framing it not merely as individual misfortune but as a burgeoning public crisis.
The story follows Maged Morsi, a 43-year-old civil engineer from Vantaa, who has faced two years of unemployment despite sending out over 500 job applications during that time. “I feel like I’ll never get another chance. I came to this country 17 years ago to work,” he lamented.
As employment services transition into municipal control, the government begins to reclaim unemployment benefits from municipalities after just 100 days of a recipient’s unemployment. The so-called “unemployment penalties” significantly strain municipal finances; for instance, Vantaa has already spent an additional 10 million euros beyond what was anticipated.
The rising financial burdens from fines are manifesting across Finland, compelling local governments to grapple with ballooning budgets. Unfortunately, no swift solutions have emerged to combat the escalating unemployment rates.
Embracing Finnish ‘Sisu’
On a more uplifting front, Ilta-Sanomat delves into a recent commendation from The Economist, which lauds the Finnish concept of “sisu,” a term often used to describe determination in the face of adversity.
In a time where the world seems increasingly turbulent, the paper suggests Finland’s timeless philosophy offers a powerful antidote, especially in contrast to the previous Nordic darling, the Danish notion of hygge, which celebrated coziness. Nowadays, in a landscape shaped by looming global superpowers, there appears to be a yearning for something much more robust.
The Economist cites a compelling survey indicating that nearly 80 percent of Finns would be willing to take up arms to protect their nation—a stark comparison to the 14 percent willingness documented in Italy. The article also notes that the 57-year-old Alexander Stubb, a prominent Finnish politician, is characterized as an ardent advocate of physical fitness, ready to lead from the front if the situation demands.
In the backdrop of these discussions, this week’s All Points North podcast introduces a troubling inquiry: Are deep-cover Russian agents making their home in Finland?
As these multifaceted challenges and sentiments unfold, it becomes clear that Finland stands at a crossroads, grappling with economic pressures while clinging to the values that define its national identity.