Tax Cuts to Boost Economy in Sweden
June 13, 2012 Taxation in Sweeden
STOCKHOLM – Sweden intends to stimulate the economy and promote fiscal security by cutting corporate tax rates and closing tax loopholes.
On June 8th, at a press conference held in Stockholm, the Finance Minister of Sweden Anders Borg announced that the government will aim to reduce the corporate tax rate later this year, saying “…my feeling is that Sweden can’t have a higher corporate tax than in competitor countries.”
The Minister explained that he cannot yet comment on the size of the proposed tax cut, as the government has not yet finalized its forecasts for tax collections for the rest of 2012.
The proposed tax cut is intended to encourage foreign investment into Sweden, boost economic activity in the country, and buffer Sweden’s financial position in order to protect against any future economic shocks.
At the press conference the Minister also announced that the government would close a loophole which allowed Swedish companies to reduce their local tax obligations by paying excessive interest payments for loans taken from related companies located in tax haven jurisdictions. The Minister said that the measure is expected to increase tax revenues by approximately SEK 6 billion per annum.
The revenues raised by closing the loophole will be used to initiate new programs to promote entrepreneurship and entice greater investment into research activities. Part of the revenues will be reserved to finance the proposed cut to the corporate tax rate.
Photo by Kirk Siang