Estonian Zero Rate Corporate Tax On Retained Earnings Admired In Finland

According to a report by Kristopher Rikken on the English language site of the Estonian Public Broadcasting authority (ERR), certain aspects of Estonia’s corporate tax regime have impressed people on the other side of the Gulf of Finland.

In fact, Jyri Häkämies, Minister for Economic Affairs in Finland, stated in an interview with Turun Sanomat, a local newspaper in Turku in the West of Finland, that he would aim to bring the proposal of abolishing corporate tax on retained earrnings, as per the Estonian model, to the table at a cabinet meeting.

The argument in favour of such a move is that it would enourage companies to reinvest their profits rather than withdraw them.

Karl Stadigh, CEO of Sampo Bank in Finland, has gone a step further and said that cuts in taxes on some dividends should also be introduced, the report stated.

Dividends are taxed in Finland at a rate of 24.5 per cent.

Arguments against zero corporate taxation on retained earnings include the fact that companies have less incentive to withdraw funds in order to start new companies.

The original report is available here.

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