A recent audit conducted by the Finnish Tax Administration has uncovered 19.5 million euros in unpaid taxes in the restaurant sector over the past five years. Unpaid corporate income tax amounts to 8 million euros of this sum.
A total of 40 million euros in hidden income had been found during the audits, according to a press release issued on Tuesday.
Starting early next year, tax officials plan to conduct additional audits and other inspections of hundreds of restaurants across Finland.
Tarja Valsi, Deputy Director at the Finnish Tax Administration, said there is a large gray economy in the sector, despite the fact that many restaurant entrepreneurs pay their taxes as they should.
Tax Administration data indicated that typical tax-avoiding restaurants are small or medium-sized takeaway restaurants, notably kebab and pizza vendors.
Valsi said that the tax-evading businesses almost always operate deliberately and make elaborate arrangements to avoid paying taxes.
Typically, tax-avoidant restaurants pay their employees such low wages that they can receive unemployment benefits at the same time as their wage income, according to the Tax Administration. In addition, the tax authorities may not receive records of the salaries paid.
"We have observed that in many restaurants the real income of employees consists of a few hundred euros of official wages, undeclared wages, and unemployment benefits. It's not only tax evasion, but also abuse of social benefits, and this needs to be stopped through effective information exchange and cooperation," Valsi said.