Finland to impose temporary profit tax on electricity companies

A temporary profit tax is set to be introduced for companies in Finland that produce and sell electricity, announced the country's Ministry of Finance on Thursday.

According to the Ministry's proposal, one-time profit taxes would be introduced in the electricity and fossil fuel sectors. The temporary profit tax rate would be 30 percent of the companies' electricity business profits, although small electricity businesses and clean electricity retailers would be excluded.

Meanwhile, fossil fuel companies would be taxed at 33 percent, as required under the European Union (EU) legislation.

The Ministry's proposal is based on an EU regulation on emergency energy measures, which requires national fiscal measures to cut profits where energy prices are too high.

The Ukraine conflict and the energy crisis have caused a surge in electricity prices, and led to a deterioration in the financial situation of households. However, the profits of energy companies have increased significantly, said the Finnish national broadcaster Yle on Thursday.

The estimated revenue from the new tax would be 0.5 billion to 1.3 billion euros (1.4 billion U.S. dollars), which would contribute to government's new electricity subsidies, the report said.

Energiateollisuus, which represents the energy sector, has previously criticized the tax as unfair and harsh, reported Yle. Energiateollisuus said that the tax did not address the root cause of the rise in electricity prices, such as insufficient production capacity. (1 euro = 1.07 U.S. dollar)