According to a new report by the NGO Finnwatch, tax planning in the mining sector has caused the government to miss out on tens of millions of euros in tax revenues.
The introduction of a mining tax would wipe out existing mining operations and prevent the establishment of new enterprises. The Finnish Mining Association FinnMin has rejected calls by the NGO Finnwatch to apply a special mining tax to stem state losses caused by widespread tax planning in the industry.
According to a new report by the NGO Finnwatch, tax planning in the mining sector has caused the government to miss out on tens of millions of euros in tax revenues.
However the mining industry lobby group FinnMin has pointed out that it is common practice in many sectors to minimise tax exposure by engaging in legal tax planning and taking advantage of loopholes in tax legislation.
“Tax planning is practiced everywhere in Western Europe. As to whether or not it’s appropriate is a good subject for discussion. I agree with Finnwatch that it should be discussed,” said Pekka Suomela, head of the Finnish Mining Association FinnMin.
Mining lobby: Industry in depression
The Finnwatch report alleges that between 2011 and 2014 companies paid a total of 92 million euros in corporate taxes in Finland. Over the same period they sold 3.8 billion euros of minerals.
Suomela said that the reason for the meagre tax payments was not tax planning, but the industry’s deep financial distress.
“Taxation requires profitable business operations. Everywhere in the world and also here the mining industry has been in a depression. In addition we have many new mines where massive investments are still being paid for. Mining companies simply don’t have any taxable income,” Suomela declared.
Mining tax would lead to bankruptcy
Finnwatch also criticised Finland for selling off its ores cheaply. It pointed to Australia, where companies are subjected to a mining tax. However the industry spokesman rejected the proposal, saying that a separate mining tax on top of current duties and landowner payments would bring the entire sector to a halt.
“If a mining tax applied to new mines then no new operations would open for a long time. If it affected existing mines and was applied on top of current taxation levels, then we would probably see more bankruptcies,” Suomela added.
The FinnMin chief concluded that a separate mining tax would only work in Finland if taxation is reformed in the entire industry.
Yle