Finnish Tax Administration seeks to advance society’s wellbeing by digitalising the companies’ operating environment

The digitalisation of business operations took a big leap when the Tax Administration experimented with using e-services in establishing a company for a foreign individual and in transmitting business data securely between organisations. The experiment showed that services provided for foreign and domestic companies can be quickly improved if machine-readable business data can be transmitted between different operators based on an authorisation granted by a company’s representative.

The experiment was implemented in cooperation with the Finnish Patent and Registration Office, the Finnish Innovation Fund Sitra, the Digital and Population Data Services Agency, Digital Living International Ltd and Nixu Corporation.

The sustainability and health of the Finnish economy are built on business

More than half of Finland’s tax revenue is generated by companies. What currently hinders the growth of Finnish and foreign companies in Finland is problems in the basic digital infrastructure and a lack of expertise and foreign investments. Consequently, financial and business data cannot be used in the companies’ day-to-day operations, and data does not move between private and public services in real time. This affects the competitiveness of Finnish companies and, in particular, it makes Finland less attractive to international companies.

“These are problems that we want to resolve as fast as possible. The experiment we implemented was a major leap forward. We also want to secure tax revenue by enabling a streamlined and customer-friendly operating environment for foreign entrepreneurs and businesses, while creating opportunities to attract human capital to Finland. Automation also makes it possible for organisations to achieve major cost savings. In addition, we want our example to encourage others to take the lead in such growth-generating, cross-cutting areas that are not the responsibility of any individual organisation,” says Miika Wires, Senior Adviser at the Tax Administration.

The experiment was also considered important from the perspective of the real-time economy theme included in the Government Programme in Finland. In practice, real-time economy means the availability of up-to-date financial data in machine-readable form, which in turns makes it possible to use automation to improve the efficiency of the processes of financial management and taxation.

The experiment showcased our technical abilities to create a world-class basic infrastructure

The Tax Administration experimented with the use of digital business data through open interfaces. The test platform used in the experiment was Sitra’s IHAN platform designed for fair data sharing. The objective is to improve services that make it easier to establish a foreign company in Finland. With appropriate permissions, the experiment used private data and public data from institutions such as the Finnish Patent and Registration Office, which is responsible for the registration of companies and for the trade register. The Patent and Registration Office linked the company’s public register data to the service.

The experiment showed that conducting business is much easier when financial data can be transmitted electronically.  In the experiment, a digital identity and an electronic identification token were created for the foreign company’s representative and the company itself. These allowed the representative abroad to establish a company electronically and hire an accounting firm without having to enter the same details again and again on different operators’ forms. The same tools can also be used to improve the efficiency of the services provided for Finnish companies.

“The Patent and Registration Office wants to participate in experiments involving businesses and entrepreneurs. We want our customers to succeed. Customer-oriented services allow us to support future entrepreneurs,” says Franck Mertens, Project Director at the Finnish Patent and Registration Office.    

The experiment also highlighted some weaknesses, such as the lack of a common digital personal identity and identification method in the private and public sector, and insufficiencies in the legislation related to data processing.

“The Tax Administration’s project was the first completed pilot on Sitra’s IHAN platform, and it is an excellent indication that services based on productisation of data can be implemented easily without heavy data integration,” says Juhani Luoma-Kyyny, Senior Lead at Sitra.

Digital society attracts business operations to Finland

“Real-time economy helps to significantly improve Finland’s international competitiveness, attract investments and boost Finnish companies’ growth. The real-time economy could simplify the daily routines of 400,000 Finnish companies and improve the efficiency of their transactions by reducing the administrative burden. The data economy technologies that were tested enable efficiency measures saving billions,” says Pirkka Frosti, CEO of Digital Living International Ltd, who led the experiment together with the Tax Administration.

The financial data sharing model created in the experiment makes it possible to meet the real-time economy objectives laid down in the Government Programme regarding taxation, e-receipts and e-invoices. In addition to improving public-sector services, the model also brings major improvements to the automation of services provided by banks, accounting firms and insurance companies.

In order for companies and investments to grow and boost wellbeing in Finland, we need a new national architecture for controlled data sharing and a digitalisation platform that is open to all operators in the private sector as well as in the public sector.