The Government proposes to lower the corporate income tax rate to 18% and to extend the deduction period for business losses
News, 9/17/2026The Government proposes to lower the corporate income tax rate from 20% to 18%. This change would affect the income taxation of both domestic and non-resident coporate entities. In addition, if a foreign corporate entity receives dividends, interest or royalties from Finland, the tax at source would be 18% in future.
The Government also proposes to extend the deduction period for business losses. If a corporate entity or partnership makes a business loss, the loss could be deducted over a period of 25 years in future. The current deduction period is 10 years. For natural persons conducting business, the deduction period would continue to be 10 years.
Schedule for changes
The legislative changes are expected to be introduced at the beginning of 2027 as follows:
- The new corporate income tax rate of 18% would be applied for the first time in the income tax assessment for tax year 2027.
- In prepayment assessment, the new tax rate would be taken into account in the prepayments for tax year 2027 and after, imposed after the changes have come into force.
- The extended loss deduction period would apply to losses for tax year 2026 and after.
- The changes to the non-resident taxpayers’ taxation at source would apply to income received on or after the date when the changes come into force.
Impact on tax filing
The corporate income tax is based on the information given in the tax return. The lowered tax rate would therefore not require any separate action from corporate entities.
The extended loss deduction period would also have little administrative impact on corporations. The Tax Administration confirms the losses from business activities annually and deducts them automatically in taxation, so the extension would not cause additional work for corporations in terms of tax filing.
Impact on prepayment amounts
The proposed changes would also affect the prepayment amount that a corporate entity pays during the year. When the tax rate decreases, the prepayment amount also decreases if the income estimate remains the same. When losses from previous years are used, the taxable income will be reduced and the need for prepayment may also be reduced.