(OIL PRICE) – The Finnish government has announced on Thursday that it has proposed a temporary windfall tax on profits from the country's electricity companies as part of a European Union response to soaring power costs. The proposed 30% tax would apply to any profits exceeding a 10% return on capital in 2023, with the government estimating it could bring in between 500 million and 1.3 billion euros ($533 million-$1.9 billion).
If the Finnish government goes ahead with its plans, it will join Germany and the UK as the other EU members that have introduced a windfall tax to energy and power companies. Starting December 1, Germany introduced a special levy that will see the country’s oil, gas and coal firms pay 33% of windfall profits, potentially generating a revenue of between one and three billion euros, Reuters reports. Dubbed the "EU energy crisis contribution", the tax is likely to affect dozens of energy companies and will target their 2022 and 2023 profits. The tax would be implemented by the end of 2022.
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The new levy will affect oil, gas and coal companies whose profits for the current year and the coming one exceed by 20% or more than their 2018-2021 average. However, the tax has a major drawback: according to Katharina Beck, spokeswoman on financial matters for the Greens, the planned levy can be circumvented on a large scale by companies moving profits abroad.
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