Finland’s Ministry of Finance has withdrawn plans to increase value-added tax rates on confectionery products, a move welcomed by local producer Fazer Group.
The government said in a statement provided to Just Food today (4 March) that the tax changes would have brought in €83m ($87.3m) in additional tax revenue annually.
In April, Finland-based Fazer Group spoke out against the government proposal warning consumers might switch to competitor brands.
Under a fiscal plan for 2025-2028, the administration of Prime Minister Petteri Orpo had planned to increase the “general” value-added tax rate from 24% to 25.5%, according to an official statement issued at the time.
The VAT on confectionery – sweets and chocolate – was going to be raised from 14% into line with the general rate of 25.5% as part of a raft of budget measures described as “decisions that will improve the sustainability of public finances and create conditions for reversing the trend in indebtedness”.
On the cancellation of the VAT plan, Fazer said in a statement that the company is “grateful for this decision, which is important for both the company and the industry as a whole”.
CEO Christoph Vitzthum said: “In cooperation with other operators in the food industry, we have been engaged in dialogue on the subject with the government parties and important stakeholders since last spring.
“On behalf of the entire food industry, I would like to express my gratitude for the fact that the government has listened to us and experts in the field and has come to a conclusion that slightly decreases the uncertainty in our industry.”
Fazer had said the legislation would have held the sweets maker back from growing exports. Due to the planned increase in VAT, the company had suspended its investment plan for a new chocolate factory last spring.
That is now back on the cards.
“With the government’s decision, we are moving forward in the investment process for Fazer’s new chocolate factory in Lahti, and we aim to make a decision as soon as possible,” Vitzthum added today.
The ministry has now suspended the preparations for the tax change and is composing a plan to compensate for the loss of tax revenue, by removing tax subsidies related to electricity use in data centres and mines.
Electricity consumed in data centres and mines is currently eligible for the lower electricity tax category in Finland, which would total an approximately €40m loss for the government per year.
According to the ministry’s statement, an increase in wine taxation is also being prepared to grow tax revenue.
The rise would apply to wines and “other fermented alcoholic beverages”.
