From March 2020 to October 2020 the World Bank engaged CRI to undertake an economic cost benefit analysis (CBA), revenue forecast and a stakeholder analysis of the options proposed by the Finland Tax Administration (FTA) project "Design and Implementation of a New VAT Reporting Model". This CBA involved the construction of an integrated project model that was used to conduct the appraisal of three interventions to enhance the current system of tax administration. These included an intervention to expand the information collected on the VAT return, (2) to introduce electronic reporting of VAT invoices by all taxpayers to the Finland Tax Administration (FTA) and (3), and finally, for the FTA to pre-fill the VAT return for small, medium and micro taxpayers. To evaluate these proposals for potential implementation, a cost-benefit analysis is used as a tool to measure the potential costs and benefits of each stage of the reform.

The cost-benefit analysis of the proposed tax administration reforms in Finland identifies two potential beneficial objectives of implementing such reforms. The first reason for conducting such a reform is to enhance or preserve revenues so that they are available to finance public expenditures. The second reason to carry out such reforms is to reduce the economic costs associated with the administration and compliance with the value-added tax (VAT) legislated obligations.   While large businesses may collect and remit the majority of the VAT tax revenues, over 98 percent of the compliance costs incurred by VAT-registered entities are borne by micro, small and medium taxpayers.

The results of this study indicate that the best option is a reform that combines the introduction of e-invoicing reporting with the FTA to pre-filling the VAT return for small, medium and micro taxpayers.  The improvements in tax administration substantially increases and stabilizes VAT revenues. But of greater importance this reform would yield a reduction of billions of euros of compliance costs now being borne by small, medium and micro taxpayers. These reductions in compliance costs received by the SME and micro businesses would provide relief to a sector that up until now have borne the largest share of the total compliance costs of the VAT.