Finland - Taxation

The corporate income tax rate is 29%, which is also the capital gains tax rate. Branches of foreign companies are taxed equally. The Lutheran church and the Orthodox church receive a share of the corporate tax. Withholding taxes, reduced or eliminated through double taxation treaties which Finland has with about 60 countries, are otherwise 25% on dividends, 29% for interest income to residents and on income from royalties, 35% on a foreign resident's salary, and 15% on payments to visiting artists and sports figures.

Personal income taxes are assessed in a progressive schedule with seven brackets, counting the 0% bracket which covers annual income up to about $8,000. The other brackets in 2002 ranged from 5.5% to 38%, with highest rate for annual income increments above $53,000. Local income taxes vary from 15.5% to 19.75% of income. Also at the municipal level is a religious tax with proportional rates ranging from 1% to 2.25% of taxable income. Other direct taxes include a wealth tax, a tax on the transfer of property assets (4.1%), and a tax on transfers of movable assets (1.6%).

Main indirect tax is a value-added tax (VAT) with multiple rates introduced in January 1994. The standard rate is 22%. A 0% rate applies to newspaper and magazine subscriptions; printing services; sale, charter, and maintenance of vessels and aircraft; and the supply of gold to the Central Bank. A reduced rate of 5.5% is charged on basic foodstuffs, water supply; medical equipment for disabled, public transportation; agricultural inputs; and hotel accommodations, as well as some pharmaceutical products, books, entertainment, social housing; medical and dental care, and waste disposal. There is also an intermediate rate of 19.6% applied in many of these categories.

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