A working group in international taxation recently issued a report that proposes many amendments to the law concerning international taxation. The report does not propose thin capitalisation rules or new transfer-pricing rules or guidelines. Instead, it proposes that an adjustment in the taxation of a Finnish related party with respect to a cross-border transaction be in some cases as a hidden profit distribution. This treatment would result in significant tax consequences under the Finnish imputation system. This proposal would significantly increase the tax burden on a Finnish company if the company is thinly capitalised or if it transfers profits abroad.
For further information please contact Jukka Nisonen, tax lawyer, Tilintarkastajien Oy Ernst & Young, Kaivokatu 8, 00100 Helsinki, Finland, telephone +358-0-1727 7282, or enter a text search 'Ernst & Young' and 'Business Monitor'.
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