Yesterday’s logic does not respond to future challenges

Securing tax revenue in the changing and digitalising world calls for new ways of working. Prime Minister Sanna Marin’s Government Programme has defined the following goal: “Companies’ financial management will make a transition to full automation by deploying electronic receipts and invoices in a structured format.”

We aim to respond to this challenge and build services that make the fulfilment of official obligations as easy and cost-effective as possible, not forgetting the inclusion of small enterprises. The goal is that taxation is a seamless part of companies’ daily activities. Through digital services, companies can use the same data in business and official reporting.

Digital financial solutions make the daily activities of small and medium-sized enterprises easier

Taxation needs to be based on volumes of different specified data on finances and payments that can be automated. Most financial data is already available in electronic, i.e. digital, format, and data can also be sent to different parties fairly easily.

Larger companies have automated their data reporting processes, while SMEs still have a long way to go on their way to digital services. We want to provide support in this.

By conducting surveys, we have identified the willingness of small entrepreneurs to increase automation. For example, most small entrepreneurs would like pre-completed VAT returns. This type of development requires the spread of digitalisation in financial management.

Better services through real-time taxation data

The goal is to build an electronic business area in the Nordic countries where data can be transferred automatically, securely and in real time from company to company and from companies to the authorities. Automated processes also improve the efficiency of operations and free resources. The development of digital services for SMEs continues together with public organisations and companies, as well as their stakeholders. Together, we will change operations and the working culture to be more digital and smoother.

On 1 September 2020, Nordic ministers of economic affairs approved the Nordic Smart Government (NSG) project’s action plan to implement the real-time economy in the Nordic countries. The NSG 3.0 project was completed in 2020, while some of its goals will move on to the national project programme. According to the Government Programme, the new goals for the real-time economy were set in the spring of 2020 for the digitalisation of financial management in companies, and the project was named Real Time Economy (RTE). The development of the digital economy of SMEs will continue in close cooperation with public organisations and companies, as well as their stakeholders.

The RTE project is based on matters identified during the NSG project, such as how financial data can be transferred between systems in standard and computer readable format, and in real time, from one company to another and from companies to authorities. For example, receipts and invoices must be available as online invoices and e-receipts to enable the automated exchange of data.

The NSG 3.0 project prepared specifications and feasibility studies for the legislation and technology required. In addition, a roadmap for the real-time economy in the Nordic countries was prepared during the project.

The promotion of the digital economy for SMEs will continue. One of the goals is to broadly adopt electronic invoices and receipts.

The vision of the digital economy for enterprises is a national ecosystem, which is interoperable with other Nordic countries. Digitalisation produces cost savings and opens up opportunities to have whole value chains operate in real time. The project’s goals are expected to be achieved by 2023.

RTE is a joint project between authorities, companies and organisations. In addition to the Finnish Patent and Registration Office, its members are the Finnish Tax Administration, the State Treasury and Statistics Finland.

A timeout for the reform of the VAT return

The Finnish Tax Administration has prepared the reform of the data content of the VAT return in cooperation with taxpayers and stakeholders. The new VAT return was to be deployed in 2022. However, its deployment has been postponed due to the coronavirus pandemic.

There was a clear need to change the data content of the VAT return because, compared with many other countries, the Finnish VAT return is brief in terms of its data content. The VAT return has remained almost in its current format ever since the Value Added Tax Act entered into force more than 25 years ago.

The current VAT return causes an administrative burden for taxpayers and supervisory challenges for the Finnish Tax Administration. A new return would give us a better overview of business activities subject to VAT, in which case we would be able to guide and supervise taxpayers in a more targeted and real-time manner.

The Finnish Tax Administration aims to promote wellbeing in society

The digitalisation of business activities took a giant leap forward when the Finnish Tax Administration tested the electronic establishment of a company for a non-Finnish person and the real-time transfer of business data reliably between different organisations. The test showed that services of Finnish and non-Finnish companies can be improved quickly if business data can be transferred in computer readable format between different parties based on the authorisation of a company’s representative. The test also involved the Finnish Patent and Registration Office, the Finnish Innovation Fund Sitra, the Digital and Population Data Services Agency, Digital Living and Nixu.

The Finnish Tax Administration tested the use of digital business data through open application programming interfaces on Sitra’s IHAN test platform for the fair data economy. The goal is to develop a service that makes it smoother to establish non-Finnish companies in Finland. The test used private and public data authorised by a company and obtained, for example, from the Finnish Patent and Registration Office, which is responsible for the registration of companies and the maintenance of the Trade Register. The participating company’s public registration data from the Finnish Patent and Registration Office was linked to the service.

The test proved that business activities become much easier by enabling the electronic transfer of financial data.

The test also highlighted observations of obstacles related, for example, to the lack of a shared digital personal identity and identification in the private and public sectors, as well as to legislation related to data processing.