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Tax authorities commission national income register

Finland’s Tax Administration announced on Friday it had selected the Finnish software and service provider Digia to construct and compile a centralised national income register of all Finnish residents. The authorities say a centralised register would eliminate paperwork and overlap.

Verotoimisto
Image: Anssi Ketonen / Yle

Finland’s taxman will entrust the building of its groundbreaking national income register to the domestic software company Digia. The deal means years of solid profit for the publicly listed company, as the Tax Administration estimates its value at just short of 14 million euros. What is more, the 15-year contract includes maintenance and further development services, bumping up the total yield to 90 million euros.

The amount is almost equivalent to Digia’s entire turnover, which was 108 million euros last year.

The tax authority publicly declared the tender winner on Friday, and Digia learned it had won the deal over competitors Tieto and Accenture at the same time as everyone else. The value of its shares on the Helsinki Stock Exchange rose by over six percent after the announcement, before the software and service company decided to interrupt trading.

Conventionally, listed companies know if they won bids before the public is informed, but stock exchange rules dictate that share trading can be suspended if the public "does not have access to information from any instrument on equal terms” or due to “other specific facts and circumstances."

Reducing the employer burden

The income register will automatically collect real-time data from company payroll systems for use by the tax authorities, the social benefits administrator Kela, unemployment funds and other parties giving out benefits. The national income register is intended to replace the semi-annual reporting burden employers now face.

According to a 2015 working paper from the Bank of Finland, the register would eliminate a mountain of paperwork and overlap, in addition to being easy for every taxpayer to access.

"Employers annually issue more than 60 statutory notifications or reports concerning wages and salaries paid. Earnings data reported by employers to different parties include overlapping information, which is stored in several separate databases. The parties needing income data (e.g. Kela, Tax Administration, insurance companies) have no possibility of reviewing this data on a real-time basis and must also still process it on paper," the paper states.

The Tax Administration hopes to launch the income register in early 2019, when salaries paid and associated transactions would begin being reported to the system. In 2020, the income register would then be expanded to include paid pensions and benefits.

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