HELSINKI: Tax subsidies and direct subsidies seem to have a positive impact on companies’ innovation activities, according to a study published by the Government Institute for Economic Research (VATT) on Wednesday.
The effects are significant for small businesses in particular, said the report, adding that most of the subsidy funds go to large companies. According to the study, correctly targeted subsidies can promote economic growth effectively, said an official press release.
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Around euro 1.3 billion in direct business subsidies is distributed in Finland annually. In addition, tax subsidies influencing business activity amount to around euro 6 billion. Of these, value-added taxation accounts for around euro 3 million and excise duty taxation for around euro 2 million, with the remainder being various business tax subsidies.
The VATT study has estimated the effectiveness of direct subsidies and tax subsidies in the light of economic research literature. The study was carried out as part of the implementation of the Government’s 2014 plan for analysis, assessment and research.
