The Strategy and Operating Principles of MuniFin in Taxation
The management of tax affairs is organised as part of the Group’s financial management. The main observations and measures related to tax issues and tax risks are reported to the Board of Directors.
The Municipality Finance Group complies with the tax legislation in the payment, remittance and notification of taxes and charges. MuniFin’s strategy in taxation is to support the business solutions and take taxation into account as one of the factors influencing the planning and decision-making related to the business solutions. Tax planning aims at controlling the uncertainties related to taxation and avoiding risks in interpretation. Therefore, MuniFin requests the tax authorities to provide preliminary rulings whenever necessary.
The Taxes and Tax-like Payments Paid and Remitted
MuniFin acquires financing from the international capital markets but conducts business only in Finland. Therefore, MuniFin pays income taxes in full to Finland. MuniFin does not receive any income from abroad for which relevant withholding tax at the source is paid. MuniFin has no investments or operations in countries defined by the OECD as tax havens.
In 2018, the Municipality Finance Group employed 151 people, of whom 141 worked for the parent company. The Group’s turnover was EUR 714.0 million and the profit before tax EUR 190.0 million. As a credit institution, MuniFin had the possibility to assign a credit loss provision in its accounting and taxation, in accordance with the Business Tax Act. The credit loss provision involves a deferred tax liability.
MuniFin’s operations are mainly exempt from value-added tax. As MuniFin is unable to deduct the VAT related to purchases in its operations exempt from VAT, the VAT remains as final costs for MuniFin. MuniFin also runs leasing operations subject to VAT, for which VAT is paid and the VAT included in the purchases is deducted. The operations of MuniFin’s subsidiary Inspira are subject to VAT. Inspira deducts VAT from its purchases and pays VAT for its sales. The amounts of VAT paid and remitted vary according to business volumes, and value-added taxes are not taken into account in the taxes paid and remitted.