Abstract

What forms of shadow economy exist in Finland and what is the estimated share of different informal activities in the economy? What kinds of measures have been taken in order to reduce the size of the shadow economy in this country? This chapter seeks answers to these questions. The objective of this chapter is to evaluate the size of the shadow economy in Finland and the measures taken to reduce its prevalence. In Finland, the so-called ‘grey economy’ covers activities in organizations where statutory obligations are defaulted on in order to avoid payment of statutory taxes, accident or employment insurance, pension insurance premiums or customs duties, as well as to obtain unjust financial advantage through avoidance of taxes or payments. This chapter concentrates on the grey economy in businesses more than tax evasion by ordinary people. It is normative and descriptive in the sense that it describes the Finnish situation based on the reports produced by working groups and authorities mainly composed of the Ministry of Finance and the Ministry of Employment and Economy.