Weak control of foreign labour and companies
cause major tax losses
Helsinki (26.04.2012- Heikki Jokinen) The tax base was
narrowed in 2010 by as much as
675 million euro due to the shortcomings in asserting control over the
labour force in Finland. In real terms this meant an actual loss in tax
revenues of approximately 100 -
150 million euro.
The figures are from a recent report on the efficacy of regulations
foreign labour in Finland. It is written by a senior researcher into the
black economy, Mr. Markku Hirvonen, and commissioned by the National Police
The report reveals that at least 31,000 foreign workers - and this is a
conservative estimate - arrived in
Finland to work for foreign companies. Some 24,000 of these employees
were not registered with the Finnish Tax Administration.
A full one third of the 6,500 companies that have the Finnish Business
Code 2006 - 2010 remain outside the Tax Administration registers. In the
2008 the Tax Administration register included 331 construction companies
from Estonia. Only a third of these saw fit to file tax reports within a
registering and only half of those registered actually paid any taxes or
Markku Hirvonen takes the Olkiluoto nuclear power plant construction site as
an example. He calls the site the highest security control workplace
in Finland and yet in 2006 - 2011 there were 304 foreign companies
working there without any tax registration in Finland. When comparing the
permissions to the site against all tax information available it was found
in 2010 the tax information supplied by almost 600 registered and more than
non-registered companies, was either incomplete or insufficient.
Another problem is that far too many foreign companies do not always abide
Finnish labour law or adhere to collective agreements. According to
the reports of the inspectors from the occupational safety and health
administration it could reasonably be said that the minimum
conditions of employment in respect of foreign employees working for foreign
companies were not fulfilled in 34 to 53 per cent of inspected work places,
depending on region.
The pattern seems to be that wages or salaries are paid according to the
scale of collective agreement even when the work belongs to a higher salary
scale. More often than not overtime is not registered or compensated. Also
salaries below collective agreement minimums tend to be the norm.
Control and legislation is split among too many ministries resulting in a
poorly coordinated and ineffective working system, Markku Hirvonen says by
way of summing up.
Finland has in practice two labour and subcontractor markets. "As a result
there are thousands of foreign registered, practically tax-free
companies, which with their tens of thousands of underpaid and tax avoiding
employees enjoy a very real and serious competitive advantage over
those companies and their employees who follow the law."