Finland unveils ambitious tax cuts alongside alarming deficit projections, as the government prepares to slash corporate tax rates to 18% while grappling with a EUR 14.9 billion annual budget shortfall that Finance Minister Riikka Purra warns requires urgent action.
Finland’s Ministry of Finance has published a proposed decision outlining government spending limits for 2027–2030, including a two-percentage-point reduction in the corporate income tax rate, lowering it to 18% starting in 2027.
This follows Finland’s parliament finalising and approving the 2026 Budget on 19 December 2025, adopting key tax measures, including a planned reduction of the corporate tax rate to 18% from 2027 and the 2026 income tax schedule.
The budget aims to stimulate entrepreneurship through the corporate tax cut and increased public investment in transport infrastructure, skills development, and business-led research and development. Additional measures include implementing DAC8 crypto-asset reporting rules, reducing Co2-related fuel taxes, and raising taxes on vehicles and tobacco.
The proposed spending framework for 2027–2030, however, reveals an average annual deficit of EUR 14.9 billion that Finance Minister Riikka Purra called “shocking.” The deficit is projected to reach EUR 12.6 billion in 2027, climbing to approximately EUR 16 billion by 2030.
Compared to spring 2025 forecasts, the fiscal position has deteriorated primarily due to declining tax revenues and lower emissions trading income. Additional pressure comes from salary adjustments, rising interest payments on government debt, and increased EU membership fees.
The Ministry estimates Finland must implement fiscal consolidation measures worth EUR 8–11 billion during the next electoral term. However, the EU’s excessive deficit procedure does not require additional adjustments this year or next, with compliance measures needed only through 2028.
The government will negotiate the public finance plan during budget framework discussions on 21–22 April.
Final approval is scheduled for 30 April at the State Council plenary session, based on an updated economic forecast to be released in April. The 2027 state budget will then be drafted according to the approved plan.
