Annual report – Finnish Tax Administration's Year 2019
Looking back at 2019 – Director General Markku Heikura discusses the highlights of 2019 (Youtube)
Year under review – Changes in the operating environment pose challenges
In 2019, we collected a total of EUR 70,360 million in taxes. The income taxes of individual taxpayers represented the largest share of tax revenue, EUR 30,818 million.
The income taxes of individual taxpayers grew by EUR 529 million. Some of this growth is due to the flexible completion of tax assessment, as a result of which part of the back taxes for this year already fell due in 2019.
Net VAT revenue in 2019 totalled EUR 18,951 million, year-on-year growth of 2.2%.
Import VAT collection was transferred from Customs to the Tax Administration as from January 2018, but VAT for previous periods is still paid to Customs.
According to an attitude survey commissioned by the Tax Administration in September-October, 96% of Finns consider paying taxes an important civic duty. Of the respondents, 95% said they always pay their taxes on time. This information is based on an extensive nationwide interview survey.
A total of 81% of Finns trust that the tax decision they receive is correct. About two-thirds of the respondents feel that the Tax Administration treats everyone equally and has been able to keep up with the changes in society. Views on the Tax Administration’s impartiality and ability to change have both improved compared to the survey conducted two years ago.
A total of 80% of those who have used the Tax Administration’s e-services feel that they are easy to use.
For the first time, the attitude survey asked respondents about the fairness of taxation. More than half of Finns consider that the taxes imposed on employment income, services and products are fair.
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In our attitude survey of corporate customers, they gave us a good overall rating. A total of 90% of our corporate customers consider our services modern. A total of 84% believe that we are developing our services to ensure that handling tax matters is as effortless as possible. A total of 77% consider our services knowledgeable and 71% reliable. A total of 77% of respondents feel that MyTax and our other online services are particularly successful. There are challenges, too. Only 58% of respondents consider our decisions predictive.
The views of our customers and stakeholders are important for enabling us to develop our operating methods. For the first time, we asked respondents in the attitude survey about our co-operation with customers and stakeholders: listening and anticipating their needs. 50% feel that we are developing things together, while 24% do not believe we engage in joint development, and 26% have no opinion yet.
In December 2019, we decided to create a dedicated model for eliciting customer participation so that we can systematically listen to them. In practice, this means that we co-operate with customers when developing any product or service that is visible to them – letters, means of notification, guidelines or user interfaces, for instance. We have taken this approach in the development of MyTax right from the start – and the results have been encouraging.
The Tax Administration’s largest development project in 2013–2019 was Valmis. We completed it successfully.
The Valmis project developed the Tax Administration’s operations on a massive scale. We remained on schedule, budget and target – which is exceptional in both public and private-sector projects. The project gradually replaced more than 70 tax applications with one off-the-shelf software package.
The project also improved tax operating processes and introduced legal amendments to standardise assessment procedures. Old legislation on assessment was simplified and harmonised to correspond with current needs.
After 2013, five phases and five successful software deployments have been carried out.
The Valmis project required large outlays. A great number of our employees were involved in the project work.
GenTax is a new tool for Tax Administration personnel, and the project also introduced a number of new procedures. Particular attention has been paid to training over the years. GenTax training courses were held for personnel in 2019.
Customers first saw the tangible outcomes of the project in spring 2019, when we sent pre-completed tax returns in the new format for the first time from GenTax.
Tax Administration EU Summit (TADEUS) is a co-operation network between the director-generals of EU tax administrations and the European Commission. The Tax Administration had the honour of hosting the first TADEUS Summit in Helsinki, 17–19 September 2019.
This meeting of director-generals of EU tax administrations sought to promote dialogue and strategic cooperation between EU tax administrations.
During the TADEUS Summit, we were also active on Twitter on our English-language account TaxFinlandand in the space of two days posted more than 250 tweets of our own content with the hashtag #TADEUS2019.
The Finnish Tax Administration and Tanzania Revenue Authority (TRA) launched a development cooperation project in autumn 2018. The project aims to help TRA develop its operations in tax control, internal auditing, communications and customer service. The project will run until 2021. It is an IKI development cooperation project financed by the Ministry for Foreign Affairs of Finland. Experts from the Finnish Tax Administration participated in the project by, for instance, training TRA officers in Dar es Salaam, Tanzania.
The technical assistance project for Tanzania is part of the Finnish Taxation and Development action programme based onthe Addis Tax Initiative. In the Addis Tax Initiative, Finland is committed to doubling its support to helping developing countries bolster their taxation capabilities by 2020.
Read more on Twitter@TaxFinland #TaxAndDevelopment
Suomi.fi authorisations and MyTax were selected as the best Finnish digital services at the Blue Arrow Awards in January. The MyTax service won both the main award and the award for best user experience andcustomer experience. In addition to its good design and implementation, another reason why MyTax won was that it affects all Finns and will have a massive influence in the years ahead.
The Tax Administration’s approach to communications – and social media in particular – sparked great interestduring the year, and our communications personnel were in high demand at a variety of the field’s events. We met demand by organising our own #miksiei (#whynot) communications seminar, which had more than 800 participants.
In 2019, the Tax Administration’s social media won numerous awards, most notably the Best Social Media Presence category at Grand one. ASMR tax whispering videos received honourable mentions both at the influencer marketing event Ping in the category fun and at the Tubecon-video event. Social media presence was also shortlisted at the international Digital Communications Awards in Berlin.
The platform economy transforms taxation
As a large share of business is moving to digital platforms, it is vital for the Tax Administration to keep up with the digitalisation trend to ensure access to information. Our expertise and operating methods must enable us to develop our operations and implement rapid changes if necessary.
Joint development and pilots
In recent years, we have engaged in plenty of joint development efforts with other organisations. We create new contacts and networks in our own operating environment, and actively join networks created by others. Our joint development projects and networks include participants from public administration, companies and associations.
We employ agile methods and pilots in our development work. We encourage personnel to actively develop and improve the Tax Administration’s operations. In 2019, our personnel proposed 175 development ideas that we started to assess and develop further in a service that turns ideas into solutions (“Ideasta ratkaisuksi”).
Examples of development projects
Service package for a death in the family
The most extensive joint development network, comprising about 50 organisations, has formed around a service package for situations in which a family member has died (“Läheisen kuolema”). Headed up by the Tax Administration and the Digital and Population Data Services Agency, it seeks to reduce the bureaucracy involved in the death of a loved one and to digitalise the background processes. The total benefits it yields for different parties amount to hundreds of millions of euros per year.
Future of corporate taxation
We are currently looking for solutions to renew corporate taxation and tackle the challenges ushered in by the real-time economy. We seek to ensure that the correct amount of tax revenue is accrued and safeguard a neutral competitive environment for companies. We want to help our customers to operate without increasing their administrative burden. It is key to engage in development together with customers and their stakeholders.
Foreign Company’s Digital Path to Finland
The Foreign Company’s Digital Path to Finland project was launched as a pilot and has since been expanded into permanent network cooperation. The pilot described the entire process that a foreign actor must complete when establishing a company in Finland. Over a period of a couple of months, we described the process in co-operation with authorities, banks and one accounting firm, identified the challenges involved, and made a list of development proposals, available in the final report on the pilot. The offline prototype was presented to Chinese customers at Slush 2019 in Shanghai.
For slightly over a year, we have tested out working in multi-expert teams in accordance with the so-called tribe concept. The pilot seeks models that can enable our organisation to increase agility and self-directed activity.
The pilot has shown that working in multi-expert teams is resource-efficient. By working together, we can harness our diverse expertise and share best practices over unit boundaries. One good example of the results of this approach is an interesting analysis of Airbnb business activities. The multi-expert team found that, for instance, more than a third of Airbnb hosts failed to report their rental income and that there were abuses in the reporting of tax deductions.
Software robotics can be used to automate human work and processes. The Tax Administration’s first software robot was designed to record property transactions in the Tax Administration’s database.
During its 239 days on the job, it stored more than 45,000 cases, a workload corresponding to 7.2 person-years. It was decommissioned in November 2019, when property taxation was transferred to the Tax Administration’s new taxation software and there was no longer a need for the robot.
Finns took the digital tax plunge in 2019 – as many as 81% of those who added information to their tax returns did so via MyTax. The use of the e-service grew by a whopping 20 percentage points compared with the previous year.
This spring, 1.4 million Finnish taxpayers added information to their pre-completed tax returns, on a par with earlier years. About 235,000 customers reported information with paper forms. This marked a significant change from the previous year: in spring 2018, just under 61% of those who added information to their tax returns did so online, while 39% used paper forms. Travel expenses and domestic help credit were the most popular self-reported information.
Four million taxpayers only had to check the information on their pre-completed forms – they had nothing else to add.
More than 70% of the revised tax cards were filed on MyTax. MyTax provides you with an electronic tax card – it’s quick and convenient. Few people need a paper tax card these days.
No tax cards were mailed out to those customers who had adopted the Suomi.fi e-service to communicate with public administration. Instead, they received a notification about their new tax card via email.
The Tax Administration and Population Register Centre challenged Finns to do a good ecological deed and opt out from receiving paper mail from the authorities. A total of almost 300,000 Finns chose to stop receiving hardcopy mail from the authorities in 2019 and started using Suomi.fi messages instead. To start using this service to communicate electronically with the authorities, log in at Suomi.fi/messages with online bank codes or a mobile ID.
For the first time, the tax assessment process ended at different times of the year for various customers in 2019. For this reason, the payment dates of tax refunds and due dates for back taxes were no longer the same for everyone. The majority of self-employed individuals and operators of a business received their tax refunds in July, and most wage-earners and pensioners in August or September.
There are a total of six payment dates for tax refunds. They fall within the period from July to December. The payment date depends on when one’s own tax assessment ends. Likewise, back taxes fall due between July and February, depending on the end date of one’s tax assessment.
In the case of self-employed individuals and operators of a business who received tax refunds or paid back taxes in July, tax assessment ended in May. For the majority of wage-earners and pensioners, tax assessment ends in June, and the payment date for their tax refunds is 6 August and the due dates for back taxes are 1 August and 1 October. A total of EUR 806 million in tax refunds were paid to 1.7 million customers in August. In August, a total of EUR 89 million in back taxes from 224,000 customers fell due.
Tax assessment of all taxpayers was completed by the end of October – tax refunds were paid no later than in December and the due date of the first instalment of back taxes, if any, was likewise in December.
The Incomes Register was first deployed on 1 January 2019. The Incomes Register is a government spearhead project in the digitalisation of public services.
The reporting of wages and employers’ contributions to the Incomes Register began on 1 January 2019. Information on wages reported to the Incomes Register is visible in MyTax and on an individual customer’s tax card and preassessment application.
The Incomes Register serves as a shared database for many authorities, compiling information on earned income, pensions and benefits. It benefits not only the authorities, but also employers and citizens.
As from April, the Tax Administration centralised its services for foreign employees moving to Finland, foreign self-employed persons and students, and companies that hire and supply employees from abroad at the service point of International House Helsinki (IHH) in Uusimaa. IHH also serves people who receive income from abroad.
Predictability and ease of handling taxes provide Finland with a competitive advantage in international investments. We want companies that come to Finland to know how to handle their taxes correctly right from the very start.
“A good friend gives you relationship advice – a real friend gives you tax advice.” We use this slogan to market our services to foreign companies interested in starting business operations in Finland. Our Startup service team provides companies venturing into Finland with easy access to expert advice on how to set up a company and all tax-related matters. With our Startup service, we focus on acquiring new customers through proactive marketing and networking. It follows up on the China Desk service, which was launched in 2017 and receives a couple of thousand contacts each year. This service was initially developed for Finnish startups that are going international, and is still part of the Startup service.
The Startup service has been developed with other public-sector organisations and private-sector actors – it has set up a service path that enables foreign self-employed persons to enter Finland as well as co-operation with accounting firms to serve new Chinese customers.
Our customers and stakeholders both in Finland and abroad are positively astonished by the exceptional Startup service. This globally unique service is a 100% Finnish innovation.
In the spring, we launched a new chat system and chatbot that together provide an even better and more cost-effective chat service channel.
We have offered chat service to Tax Administration customers since 2015
In the busiest months, we have had as many as 48,000 chats. Customers have enjoyed using chat as an advice channel.
In social media, the most important objective in the Tax Administration’s new strategy is to foster positive customer experiences. To achieve this objective, we revised our content production, interaction and organisation of social media work in 2019.
A new content team took responsibility for content design and production. We set aside shared working time for the team and encouraged it to engage in agile and data-focused pilots. We developed a content concept and diagram to support content production. The key drivers are boldness, courage and empathy. We put greater focus on customer-focused content that elicits engagement.
As our audience grew, so did interaction. To serve this need, the social media team piloted a new tool and way of working during the tax return season: new community managers were tasked with managing interaction with a management tool that combines the channels. During peak workloads, we also organised on-call pilots in the evenings and on weekends. These pilots yielded good results. In the autumn, we adopted this approach as standard practice and two customer advisors started working on social media on a daily basis.
Instagram sees the greatest growth for the second year running
Interaction grew by as much as 64% year-on-year. The Tax Administration’s 10 channels received a total of 25,000 questions or comments and 127,000 reactions. Most of the comments were either neutral or positive in tone. We produced 2,600 pieces of content and 9,000 comments or answers.
The audience of our channels grew by 25,000. As in 2018, Instagram saw the greatest growth, almost doubling (+96%). Instagram stories also generated large growth in views, +380%. Follower numbers grew almost as much on LinkedIn. The total earned media value of the main channels grew to EUR 513,000.
Pre-emptive discussions were earlier available for the customers of the Large Taxpayers’ Office. As from the beginning of 2019, almost all organisations, such as limited companies, have had the opportunity to request the Tax Administration for a pre-emptive discussion on challenging tax questions. These discussions can, for instance, assess the tax impacts of M&As. A pre-emptive discussion can provide a company with an alternative to seeking an advance ruling. A pre-emptive discussion is free of charge to companies.
A pre-emptive discussion is intended to ensure greater predictability in the taxation of the organisation and guide it to operate correctly before the tax-related arrangements are carried out. The discussion provides the organisation with information on the tax impacts of different alternatives. The organisation decides which alternative to implement. With these discussions, the Tax Administration wants to facilitate the treatment of tax matters and improve the transparency of operations.
Companies collect and pay the bulk of tax revenues, such as in the form of withholding taxes on wages and VAT. We seek to find the most appropriate way of ensuring the accurate taxation of each customer and customer group. Our goal is to provide services that are as precisely targeted as possible and thereby minimise the burden caused by attending to tax obligations. This also encourages corporate customers to take a favourable view of paying taxes and improves their desire to act correctly.
We ensure that the right amount of tax revenue is accrued by identifying and intervening in tax risks in advance. Risk-focused operations steer the design of measures targeted at companies and the use of resources. Comparative data is used to identify phenomena that influence taxation. We have significantly enhanced the use of this data.
By identifying tax risks, we can target guidance and control of companies for maximum effectiveness and help customers to act correctly.
As the digital economy gains more ground, it is our task to ensure income and information flows for the implementation of taxation. We support customers by advising them about the tax obligations involved in new earnings methods. We actively follow digital economy phenomena and use control measures to address negligence in taxation. In 2019, the focus areas of control included short-term accommodation services, virtual currencies and distance selling, which yielded a substantial amount of tax revenue.
We have developed analytics using a variety of external comparative data to identify and control digital economy phenomena. Cooperation between the authorities also harnesses analytics. Internationally, we have exercised influence on the taxation of the digital economy and the development of its control in both the EU and the OECD. For example, as from 2024, EU member states will have access to information on cross-border payment transfers for use in fraud prevention. In addition, we have assisted the Ministry of Finance with the OECD’s digital taxation reform.
In the fight against the shadow economy, we have made even greater outlays on preventing abuse by increasing awareness of new shadow economy phenomena and methods of committing fraud. We have organised training for other authorities and bank staff, auditors and students. Urban co-operation with the Finnish Competition and Consumer Authority continued in 2019. For self-employed persons, we carried out a campaign to increase awareness to help companies avoid becoming involved in VAT fraud. The campaign included, for instance, an animated film on social media.
In our efforts to combat the shadow economy, we concentrate on assessing and preventing serious tax fraud. We have systematically developed our risk-based audit targeting, thanks to which our audits are now more precisely focused on financial criminals. In 2019, more than 86% of the cases audited had tax consequences, of which more than 74% were considered for reporting to the police. A major share of tax audits were still carried out in co-operation with the criminal investigation authorities.
The shadow economy specialists’ control of self-assessed taxes and registration has effectively prevented groundless tax refunds and registrations. In the case of self-assessed taxes, action was taken as a result of about a third of the cases. A total of 3,136 cases were handled. The shadow economy specialists dealt with 828 registration cases, of which 683 led to blocking or removal from the VAT Register. The cases that led to removal from the register on the basis of the observations made caused tax losses of EUR 5,000 on average per each month they were included in the register. It is estimated that tax losses of about EUR 18.7 million were prevented in 2019 (EUR 15 million in 2018).
Co-operation between the authorities plays a major role in preventing financial crime. It has been stepped up further. Shadow economy tax auditors serve as liaisons for information exchange and operational activities with different authorities, most recently the Finnish Immigration Service and the Finnish Food Safety Authority. Plenty of joint control measures in a variety of sectors were carried out with different authorities. These included the taxi business, monitoring of cabotage in the passenger transport industry, and control measures in the restaurant, construction and berry farming industries. In addition, we have developed effective tools for monitoring the workforce.
International cooperation plays a significant role in the fight against the shadow economy at the Nordic, EU and OECD levels. In 2019, Finland headed up the updating of joint Nordic training for tax auditors on how to identify money laundering and financing of terrorism. The training will be carried out in 2020, along with joint Nordic training on identifying identity abuse. Both types of training can also be offered to other authorities.
Effective exchange of information between authorities is one of the keys to combating the shadow economy. Exchange of information between the authorities is developed in a joint working group whose members are key register custodians and the users of the information.
In 2019, we published dozens of reports on shadow economy phenomena and drafted more than 400,000 reports on the meeting of obligations to support the authorities in the performance of their tasks.
In 2019, more parties started using the reports on the meeting of obligations, such as the registration of collection measures by the Regional State Administrative Agency, the registration of virtual currency providers by the Financial Supervisory Authority, and assessment of cases of restriction of competition by the Finnish Competition and Consumer Authority.
The authorities publish joint snapshots of the shadow economy and financial crime online on the shadow economy & financial crime page, which is coordinated by the Information Unit. The page provides an overview of the scope of the shadow economy, current phenomena, ongoing official projects and prevention measures, and tips on correct behaviour for companies and individuals.
We continued our efforts to improve personnel well-being and job satisfaction in 2019. In the autumn, our job satisfaction survey revealed that the job satisfaction index had once again risen slightly. Our job satisfaction is currently higher than the average for the central government as a whole.
On the basis of the results of the job satisfaction survey, we designated employees’ opportunities to influence their own work as a focus of development.
For telecommuters, combining work and leisure time became even easier in 2019. In December, telecommuting privileges were expanded from 1-2 days to 1-3 days. We also managed to lighten the administrative burden involved: employees can now agree on telecommuting verbally with their own supervisor, without the need for a written telecommuting agreement.
The equality and non-discrimination plan for 2019-2021 was completed. In this plan, we set three development focuses: we will improve working conditions and offices, improve equality between those who speak Finnish and Swedish as their mother tongue, and prevent harassment, discrimination and inappropriate treatment at the workplace. We keep track of development focuses with the Tax Administration’s indicators, such as the VMBaro survey and statistics.
The plan also reviewed the objectives of the previous equality and non-discrimination plan and assessed their realisation. Employees’ experience of gender equality and non-discrimination has improved steadily in recent years.
We set our sights on customer-focused operations as well as target- and knowledge-based management. We launched two strategic projects to achieve our objectives.
In our project to develop operating methods, we decided to create a self-directed working model and mobilise it in the daily work of Tax Administration employees by the end of 2022. We also set the objective that each Tax Administration employee will contribute to developing the smooth flow of our operations.
In addition, we started a pilot in which we hold personnel-initiated discussions alongside traditional performance reviews. Employees of the units involved in the pilot book discussions for themselves at a time that suits them. Those participating in the pilot have given positive feedback and our personnel-initiated discussion culture matured.
In the sphere of financial responsibility, we have improved productivity and cost-effectiveness, reduced the taxpayers’ administrative burden and improved planning and monitoring systems.
As part of our social responsibility, we treat taxpayers and staff fairly and equally, and improve well-being at work and health management procedures.
With regard to environmental responsibility, we continued to implement the Green Office programme. The aim of this WWF programme is to help organisations to reduce their environmental load and to slow down climate change. The environmental load caused by travel increased somewhat, due to an increase in air and train travel. Paper use remained at the level of the previous year. However, the number of letters mailed decreased by 6 million, which equates to 28.4%. The kilogram amount of printed forms also saw a decrease of approximately 100,00 kg.
The kWh figures for electricity and heat consumption remained almost unchanged, but the carbon dioxide emissions increased slightly.