Finland's Transport and Communications Agency Traficom, which issues and controls taxi licences, will send a letter of formal notice to about 350 taxi operators over the coming days urging them to pay outstanding taxes and fees within three months. If they fail to do so, the agency will remove their license to operate taxis.
The number of formal notices issued by the agency this year is more than twice that of previous years, when approximately 120-130 firms received such notifications.
The increase can be attributed in part to the introduction of the Transport Services Act in July last year, which made acquiring a taxi license easier than before, and led to the agency issuing over 4,000 new licences.
Unfamiliar territory for new entrepreneurs
Many of the new operators have little or no experience of running a business, and an increasing number of taxi companies have failed to make compulsory payments, according to Pasi Hautalahti, a senior specialist at Traficom.
However, Hautalahti does not believe that the failure to pay taxes and fees is caused by a systematic decision, but is rather due to a lack of experience and understanding of the rules on the part of the new operators.
"The biggest omissions are VAT invoices. When there are new operators in the industry who have no experience running a business, VAT invoicing may be new," Hautalahti explained.
The Transport Services Act significantly loosened the requirements needed to obtain a taxi license, and Hautalahti believes this has created a knowledge gap.
"I have a lot of questions related to training. Among other things, the new Transport Services Act removed the mandatory four-week taxi operator training requirement," Hautalahti said. "This training helped the operator to acquire the skills needed to run a business, but now it is no longer required, and is not a prerequisite for granting a permit as before."
Tax administration notes lack of registrations
The Finnish Tax Administration announced at the beginning of July this year, on the anniversary of the introduction of the new law, that it noticed a quarter of the new licencees, or 1,000 out of the 4,000, had not yet registered with the tax authorities.
At the time, Marko Myllyniemi, the tax authority's Director General, told Yle that the authority was concerned about the growth of a grey economy as the new legislation took effect.
"We have noticed some disturbing developments, but we will not draw any conclusions yet. We will monitor these issues and see how taxes and other charges accrue, and then respond to the situation as needed," Myllyniemi said in an interview at the beginning of July.
Hautalahti confirmed to Yle that the tax administration's grey economy unit asked Traficom for all taxi license holders' business IDs and personal identification numbers. The authority then cross-checked them against their own records to check if all registrations were valid, and if there were any overdue taxes and debts.
"The tax administration is looking at the issue through the perspective of tax revenue. The tax authorities said that the tax accruals are lower than they were in previous years," Hautalahti said. “We have thousands of new companies in the industry, and I understand that there hasn't been a huge drop in demand for taxi services, so that's a strange equation."
The numbers are "surprisingly large"
Initial investigations found that approximately 9,800 licensees had not paid the necessary taxes and fees, with tax authorities reporting over 1,500 taxi companies for further examination.
According to Hautalahti, most of the cases concerned very small amounts, but there were also a number of more worrying cases.
"I didn't expect the number to be that high. The old law was accompanied by an annual oversight obligation, and the centres for Economic Development, Transport and the Environment, which handled the licensing matters, collected similar information," Hautalahti said.
Statistics from a 2016 report show that there were a total of 1,245 taxi companies with unpaid taxes, and now there are more than 2,400 companies on the list.
Hautalahti points out that most debtors owe so little that not all of them came to Traficom's attention.