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Changes regarding the income taxation of corporations

Changes regarding the income taxation of corporations

Changes regarding the income taxation of corporations have come into force earlier this year. The changes concern tax collection, the implementation of taxation and certain penalty fees (HE 97/2017). These legislative amendments have come into force on 1.5.2018, and they will be applied to income taxation for the tax year 2018.

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The tax assessment end date varies according to each tax payer

Assessment ends on the date stated on the tax assessment decision and this date may vary between individual tax payers. 

— After the assessment the Tax Administration issues the tax assessment decision  

— In most cases, tax assessment ends earlier than at present 

— At the latest, the assessment ends 10 months after the last day of the calendar month when the corporation's accounting period had ended.

— The date when tax refunds are paid out and the due date for back taxes are determined by the closing date of the assessment

— These dates and instructions on paying back taxes are specified in the tax assessment decision

The supplementary tax decision

The supplementary tax decision is a new procedure in income taxation

— The Tax Administration issues a supplementary tax decision, if a corporation makes a claim for adjustment and reports new information which affects the assessment, such as a deduction or other information not included in the tax decision made

— Information is considered new when it has not been reported by the tax payer in the ordinary taxation

— New information can include for example sales revenue which has been missing from both the accounts and the tax return

— New justifications or amended claims presented after the tax assessment has ended are not considered new information

— The supplementary tax decision is a complement to the ordinary taxation and does not form part of the appeal procedure

— The Tax Administration performs a new assessment regarding the new information reported by the tax payer

Penalty fees are harmonized

The late penalty charge is a new penalty fee in income taxation 

— The late penalty charge is a flat-rate fee and it is imposed once per tax year 

— It can be imposed until the tax assessment ends

— The amount of the late penalty charge is 100 euros for corporations and joint administrations 

— The Tax Administration imposes a late penalty charge, if 

a corporation files the tax return after the due date but before the tax assessment ends (on its own initiative or at the behest of the Tax Administration)

a corporation, on its own initiative, supplements the tax return to its own detriment before the tax assessment ends

The Tax Administration imposes a tax increase on a corporation, if it has neglected its duty to declare:

— The corporation has not filed its tax return before the assessment ends

— The corporation has filed an incomplete or incorrect tax return or provided incomplete or incorrect information or reports and it has not on its own initiative corrected this before the assessment ends

— The tax increase imposed on a corporation is always at least 150 euroso This applies even if there is no increase in taxable income or the percentage-based tax increase would be less than 150 euros 

— In specific cases the tax increase imposed on a corporation may reach a maximum of 25.000 euros: 

If the duty to present transfer pricing documentation is neglected 

If the duty to present country-by-country reporting is neglected

If an unfounded claim to offset foreign tax is made 

Changes to authorizations

As the Katso identification system is phased out authorization procedures at the Tax Administration are undergoing changes. In November 2018, the Finnish Tax Administration will introduce Suomi.fi authorisations for managing tax matters. Only one authorisation will be in use in MyTax: Managing tax matters.

Both individual and corporate taxpayers can use the Managing tax matters authorisation for authorising another individual or company to take care of their taxes. It is possible to grant authorisations to others in Suomi.fi e-Authorisations already today, but the new authorisations will not work in MyTax before November.

More information

Ella Kunnas

+358 20 7603 173

firstname.lastname@kpmg.fi

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