Recently, Finland’s Ministry of Finance made a pivotal decision to retract plans to increase value-added tax (VAT) on confectionery products. This reversal has been enthusiastically welcomed by local producer Fazer Group.
In an official statement released today (4 March), the government clarified that the proposed tax changes would have generated an additional €83 million ($87.3 million) in annual tax revenue. However, the potential impact on local businesses concerned many.
Back in April, Finland-based Fazer Group publicly opposed the government’s proposal, warning that consumers might turn to competing brands as a result of increased prices.
The fiscal plan outlined by Prime Minister Petteri Orpo’s administration for 2025-2028 included a rise in the general VAT rate from 24% to 25.5%. As part of this plan, the VAT on confectionery—encompassing sweets and chocolate—was set to escalate from 14% to match the general rate.
In light of the cancelled VAT proposal, Fazer expressed its gratitude, noting that this decision holds significant importance for both the company and the broader industry.
CEO Christoph Vitzthum remarked: “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.”
He added, “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 pointed out that the proposed VAT legislation would have hampered its ability to grow exports. Consequently, the company had postponed its investment plans for a new chocolate factory last spring. Fortunately, these plans are now back on track.
“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 stated today.
In response to the cancellation of the tax hike, the ministry has halted preparations for the VAT change. It is now devising a strategy to offset the lost tax revenue by eliminating subsidies related to electricity used in data centers and mines.
Currently, electricity consumption in these sectors qualifies for a lower tax category, which represents a revenue loss of approximately €40 million annually for the government.
The ministry has also announced plans to increase taxes on wine, which will affect wines and “other fermented alcoholic beverages” as part of its efforts to boost tax revenue.