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Choose a reliable contracting partner

Business activities with a reliable partner benefit your own operations, but also society as a whole.

As an entrepreneur, you must act carefully. It is your duty to assess whether your contracting partners are reliable in terms of taxation. This way, you will not be held accountable for any fraudulent supply chains.

The shadow economy harms not only individuals and companies, but all of society as well. Tax revenues are used to fund public service. When actors within the shadow economy neglect their obligations, it means that others need to pay more taxes. The shadow economy also harms the operations of honest entrepreneurs. The shadow economy distorts the general level of prices, and affects the competitiveness of companies. The safety and quality of various services and commodities is also compromised.

There are many ways to evaluate the reliability of a partner

In addition to the assessments required by the Act on the Contractor’s Obligations and Liability when Work is Contracted Out, a company can use different indicators to assess whether certain activities are taking place within the shadow economy.

1) Pay attention to the price and background

  • The price of services and commodities is considerably lower than the market price.
  • The contracting partner does not have a long business history.
  • The company or its representative is not familiar with the product or the market.
  • The company is not in the Tax Administration’s registers even if its business activities are extensive.
  • The company does not give a reliable account of the workforce used for producing the services.

2) Pay attention to procedures

  • The contracting partner is represented by someone other than the persons officially in charge of the company.
  • The company’s contact persons or those in charge do not change, but the company’s contact or bank account information changes repeatedly.
  • The company does not change, but the contact persons or those in charge change and the price drops significantly at the same time.

3) Pay attention to payment arrangements

  • The seller insists that even large amounts should be paid in cash.
  • You are asked to make a payment to a third party or into a foreign bank account (e.g. tax havens).
  • You are asked to split your payment between several bank accounts.
  • Payment arrangements seem strange or suspicious.

Please make it routine to consider these matters when you evaluate the reliability of your contracting partners.

If you notice something suspicious, please notify the Tax Administration by using the tax evasion report form.

Page last updated 4/1/2020