Grey Economy 2015 reports grey economy in Finland and how it is fought against

Finnish Tax Administration’s publication Grey Economy 2015 gives an overview of how grey economy is fought against and how public funds are protected from it. The publication also describes the cooperation across Finnish administrative sectors, introducing the City of Helsinki and the Finnish Funding Agency for Innovation, Tekes, as the Tax Administration's allies in the combat.

Amendments to legislation help combat grey economy

To increase a potential perpetrator's risks of criminal prosecution is an important preventive force, and making the administrative and criminal consequences rapid and effective is another. Changes to legislation, such as the recent changes in the construction sector, have reduced the opportunities for players in the grey economy, says Director Janne Marttinen fromTax Administration’s Grey Economy Information Unit.

When we cooperate across administrative sectors,  the importance of information exchange cannot be emphasized enough. ”In the past few years, the Information Unit has studied the authorities’ powers to obtain and process information from other authorities.  We have studied how well permit-granting authorities have been able to examine how senior managers fulfil their public law obligations in the companies for which they apply for a permit or in their other companies.  To have the powers to perform a thorough background check would make it possible to target our control measures on companies that neglect their obligations” says Janne Marttinen.

Public procurement and public subsidies key target areas

The value of procurement of goods and services by public sector bodies, as well as the construction work they commission, is about EUR 33 – 35 billion annually. The significance of public procurement has continuously increased because many public services are delivered by private service providers. According to Parliament’s Audit Committee, the presence of any type of corruption in public sector procurement and local decision-making puts a strain on services paid for by taxation, and distorts healthy competition in business.

About one billion euros of public subsidies are awarded to companies in Finland annually by ministries and authorities. Because there are many awarding bodies there are many laws governing the funding procedure, and the procedures are different.

In their procurement and funding, the City of Helsinki and Tekes look into the background of the service provider or funding candidate as thoroughly as possible.“ In checking the background, one of the problems is that the access to information about how well the companies and their senior managers have fulfilled their obligations is limited. In consequence, the contract may be won by what we call risk operators, Janne Marttinen observes.

Prepayment Register tells you how well your prospective partner has fulfilled their tax obligations   

Prepayment Register data is public information which is easy to check and predicts how well a sole trader or company fulfils its tax obligations. A company can be removed from the Prepayment Register if it neglects a significant tax obligation, for example if it fails to file a tax return or does not pay taxes.

“Supervision measures initiated by the authorities and removals from the Prepayment Register go hand in hand. Companies can easily check in the Prepayment Register and Tax Debt Register whether their cooperative partners have fulfilled their obligations, and on the basis of that publicly available information, build a reliable network of reliable people you can do business with”, says Janne Marttinen.

Read Grey Economy 2015 on the web:

• Grey Economy 2015 (pdf)