Tax fraud the most common economic crime
Tax offences, accounting offences, offences committed when holding office, security market offences, offences by a debtor and some environmental offences are classified as economic crime. The most common of these are tax offences, which accounted for 48 per cent of the abovementioned economic crime in 2016. The increase in tax offences in recent years is partly explained by the higher number of audits conducted by the tax authorities. The overall economic situation is also having an effect on the prevalence of economic crime, which tends to increase during recessions.
In addition to crime related to business activities, an important group of tax offences involves tobacco and alcohol smuggling.
In recent years, tax offences in trade with Russia have emerged as a new category of tax offence that is independent of economic trends.
Shadow economy causes major economic damage
Legal business activities involving the non-payment of statutory payments and taxes form part of the shadow economy. Estimates of the shadow economy’s share of Finnish GDP range from one billion to 14 billion euros. Crime entails economic losses for society when taxes and levies are left unpaid. Estimates on such losses range from a few hundred million to five billion euros a year. Crime that rarely comes to the attention of the authorities tends to be a salient feature of the shadow economy.
In addition to lost taxes, the shadow economy causes significant losses to entrepreneurs that operate within the law, as it weakens their ability to compete. It also offers domestic and international crime a way of spreading its influence within the economy and other societal structures. The construction and restaurant sectors are particularly problematic, but the shadow economy also thrives in the transport and cleaning business, the shipbuilding industry and trade with Russia.
The fight against the shadow economy is coordinated between over 20 authorities in eight branches of government.
- Action Plan against the Shadow Economy and Economic Crime for 2016–2020pdf | FI
- Government Resolution on a National Strategy for Tackling the Shadow Economy and Economic Crime for 2016–2020 | FI
- Fight against money laundering and terrorist financing FATF
- The legislative project on preventing money laundering and terrorist financing | FI
- Combating the grey economy | Vero.fi