On 17 September 2026, the Finnish Government unveiled a landmark tax reform package proposing to reduce the corporate income tax rate from 20% to 18% effective 1 January 2027, and to extend the loss carryforward period from 10 to 15 years. The bill amends the Business Income Tax Act (360/1968) Sections 14 and 33. The rate cut aligns Finland with the OECD Pillar Two global minimum tax framework, ensuring domestic groups remain competitive while meeting the 15% effective minimum. The extended carryforward addresses long-standing industry concerns about the utilization of losses in cyclical sectors.
Key Takeaways
- Rate Reduction Mechanics: The 18% rate applies to all corporate taxpayers, including limited liability companies, cooperatives, and public entities. Transitional rules ensure that fiscal years straddling 2027 apply a pro-rata rate based on days in each period.
- Loss Carryforward Extension: Losses incurred in financial years starting on or after 1 January 2024 may be carried forward for 15 years (previously 10). The change is retroactive, benefiting existing loss pools. No carryback mechanism is introduced.
- Interaction with Pillar Two: The Government confirms the 18% statutory rate, combined with existing deductions, yields an effective tax rate above the 15% global minimum for most groups. However, MNE groups should model the impact of the loss extension on their GloBE income calculations.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement