On 13 June 2012 it was published that the Finnish Government has released a draft regarding a bill to limit the deductibility of interest expenses in business taxation. The goal of this proposed regulation is to secure Finland’s tax base and to balance competition between domestic and foreign groups of companies.
At the moment, interest expenses are widely deductible in business taxation and deductibility can be restricted only by applying the transfer pricing regulation or the general provision for tax avoidance. Applying the new proposed limitation will not require any intention of tax avoidance or deviation from arm’s length principle, but it will be applicable as a general rule.
