The Ministry of Finance prepares the tax laws that regulate taxation. Taxpayers include all people living in Finland as well as corporations and companies doing business in Finland. Tax recipients in addition to the state include all municipalities as well as the parishes of the Evangelical Lutheran Church of Finland and the Orthodox Church of Finland, and the Social Insurance Institution of Finland Kela. Taxes are levied by the Tax Administration and the Finnish Customs. In addition, the Finnish Transport Safety Agency Trafi collects the vehicle tax.
Taxes can be classified into direct and indirect taxes. In a rough division, income tax is direct and consumption tax is indirect tax. Usually, the aim of changes to the structure of taxation is to affect economic development as well as the structure of production and consumption. In Finland, the focus of taxation has been moving from the taxation of income to the taxation of consumption starting from the 1990s.
Tax subsidies are a form of tax concession with the purpose of supporting a group of taxpayers. Many tax subsidies could alternatively be distributed from the debit side of the budget as direct, concrete subsidies to the recipients. More information about tax subsidies, see Tax subsidies.
Taxation is being harmonised within the European Economic Area. However, the individual states have extensive autonomy in taxation, and it has a central role in the national economic policy. The share of taxes and charges comparable to a tax out of the total production, i.e. the total tax ratio, is currently 44%. The changes in the total tax ratio are affected by the economic trends and the tax policy decisions. Finland has the fourth highest total tax ratio of the OECD countries.