Ensuring tax revenue

Ensuring tax revenue for society is our most important task. We give attention to the effortlessness and reliability of taxation. We acquire and use tax data comprehensively. We tackle the grey economy and thereby eliminate unhealthy competition. By improving our ways of working, we also secure the accrual of tax revenue in the future.

Our success in the two strategic goals – creating a positive customer experience and achieving fair taxation – helps us achieve the third strategic goal of ensuring tax revenue for society.

These comprehensive activities contribute to the UN Sustainable Development Goal 16: peace, justice and strong institutions.

Tackling the grey economy

The grey economy reduces the amount of funds available to society. We use a variety of tools to tackle the grey economy and investigate tax offences.

The targeting of grey economy tax audits improved from the already good level of the previous year, with 93% of audits resulting in measures (2022: 91%) and 86% of the audit targets (2022: 87%) forwarded for the consideration of a report of an offence. We prevented unjustified registrations in the prepayment and VAT registers and removed inappropriate entries: a total of 2,437 such tasks were processed (2022: 2,145). When controlling cases of tax refund fraud by bankrupt companies, we rejected the withholding of persons responsible for such companies and their related parties amounting to nearly €1.5 million. We also monitored 1,005 operators in industries such as the taxi, restaurant, construction and festival industries in cooperation with other authorities (2022: 721).

Grey Economy Information Unit

As part of the Finnish Tax Administration, the Grey Economy Information Unit assesses the impact and prevention of different grey economy phenomena and the effectiveness of legislation. The unit also prepares reports on phenomena to support the operations of control and licensing authorities, as well as produces digital compliance reports as an information service to support the tasks of public authorities.

In a report on audits, we examined non-compliance with audit obligations and the impact of tax risks on the likelihood of non-compliance. We assessed the size of the tax gap caused by the grey economy through quantification studies, which identified abuse of the tax credit system for household expenses and domestic companies operating outside the registers. In total, 150 reports on different phenomena, statements and other information provision tasks were completed during the year.

The use of the obligation compliance reporting service continued to expand to support new tasks of the public authorities, and the service was used in 37 public authority tasks by the end of the year. More than 700,000 obligation compliance reports were commissioned.

Coordinated by the Grey Economy Information Unit, the situational picture on the grey economy and economic crime maintained an up-to-date situational picture by publishing 61 information products on the Grey economy and economic crime website.

Action plan for tackling the grey economy and economic crime

Most projects under the action plan for tackling the grey economy and economic crime for 2020–2023 were completed by the end of 2023.

A project on the misuse of identities and tax refund fraud was of particular importance. It improved our capability of identifying misuse and the tools we use. More broadly, the project highlighted challenges with the registration of foreign employees in Finland. In 2024, we will continue to develop the tool created by the project.

An insurance wrapper control project highlighted not only control development needs but also the need for legislative amendments. We launched research on aggressive tax planning with four research organisations, which we will continue in 2024 and 2025. We investigated the opportunity to more widely utilise criminal record data in the tackling of the grey economy. We also investigated the possibility of developing the powers and auditing rights of the Finnish Tax Administration and Finnish Customs to correspond with the powers of other national authorities and international developments. This matter cannot be advanced further without a political decision.

Within the scope of the grey economy action plan, we also realised a research project on international safeguards and enforcement measures, legal remedies and administrative assistance available to tax authorities and stakeholders, and EU regulation.

We proactively prevented the grey economy through a three-year communication project aimed at young people and immigrants entering the labour market. The project created a communication concept (happytaxpayer.com), reformed the verokampus.fi website and reached out to young people through a variety of social media channels.

Several legislative amendments were made during the programme period, resulting in an expansion of the Grey Economy Information Unit’s obligation compliance reporting service to support ten new tasks of the authorities.

During the programme period, the Finnish Tax Administration completed a total of 12 projects, of which five were implementation projects and seven research projects. We performed a self-assessment, in which the effectiveness of the projects in terms of tackling the grey economy and economic crime received a (median) score of 8 on a scale of 4 to 10. We gave the project a score of 9 in the implementation of the grey economy and economic crime prevention strategy. The flexibility of the action plan, i.e. the possibility to launch new projects if the situation so requires, was rated at 9. On the other hand, the importance of funding for the action plan was given the score of 10: without separate funding, the implementation of several projects would not have been possible.

Overall, most of our projects for the programming period progressed according to plan. Individual projects, such as a legislative amendment concerning the Grey Economy Information Unit, were not implemented due to lack of time or resources, or for other reasons.

Survey highlights

10% of respondents completely or to some extent agree that they could refrain from declaring at least part of their income if the risk of being caught was low.

90% feel that the Finnish Tax Administration effectively controls the declaration of income and the payment of taxes.

Source: The Finnish Tax Administration attitude survey 2023

Metrics and goals

We monitor our successes and develop our operations using the following metrics and goals:

1) The actual figure for 2020 does not include car taxes and excise duties transferred from Finnish Customs.

2) The VAT gap has been estimated using a calculation method developed by the Tax Administration and based on tax control results.

Case: We act as a gatekeeper for false registrations

Misuse of identity provides a variety of opportunities for criminals to commit fraud. The keys to fraudulent activity are provided by one authority, but the fraud may be detected in the course of another authority’s control measures.

In recent years, the Finnish Tax Administration has registered more foreign nationals than any other authority in Finland. We have therefore developed our registration procedures to better identify, already in connection with the registration, actors who seek to use fraudulently obtained or stolen personal identity codes or Business IDs for fraudulent purposes.

The development work has been carried out as part of a project on the misuse of identity and tax refund fraud (the ID project), which was part of the action plan for tackling the grey economy and economic crime that was concluded at the turn of the year. The ID project can be considered one of the action plan’s most important projects, as it highlighted the need for highly significant cross-administrative improvements involving matters such as the overall coordination of public authorities.

The growing internationalisation of fraud leads to significant tax losses and has a wide-ranging impact on our welfare state. The prevention of fraud is part of our responsible operations. We want to collect taxes for society to use and guarantee fair competition for honest operators by preventing dishonest or fraudulent activities.