On 17 October 2008 the Finnish Government issued a Bill to amend the current Business Income Tax Act in accordance with international financial reporting standards and recent development in bookkeeping legislation. The Bill proposes amendments to the current Business Income Tax Act regarding e.g. taxation of unrealized changes in the values of certain financial instruments and exchange rates, determination of acquisition costs of goods, valuation of inventories and income spreading in taxation. The Bill also proposes to renounce the schematic credit loss reserve system.
In addition, the Bill contains several amendments in relation to use of own shares. Consideration for sale of a company's own shares would, according to the Bill, be tax exempt income for the company. Correspondingly, the acquisition cost of own shares would be a non-deductible cost for the company. However, acquisition cost for own shares that are transferred based on employment relationship would, under certain conditions, be a deductible cost. The use of own shares in the possession of the company as consideration in corporate rearrangements such as mergers, divisions and transfers of business would now be allowed also in taxation, which makes the implementation of the transactions more flexible than earlier.
The amendments would be applicable in the taxation for year 2009 with certain transitional provisions.
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