Finland's general rate of Value Added Tax (VAT) will rise to 25.5 percent from 1 September, the Ministry of Finance has confirmed in a press release.
The government of Prime Minister Petteri Orpo (NCP) announced its intention to increase the rate following budget framework discussions last month.
The administration sees the VAT rise as a key step towards achieving some nine billion euros worth of spending cuts and tax rises during its term in office. According to its own estimated figures, the additional revenue will inject more than one billion euros a year into the state coffers.
The move has however been met with widespread criticism, with a report by Statistics Finland noting that the decision will have a disproportionately negative impact on lower-income earners.
Although the intention to increase the rate of VAT was announced in April, no date was given until the finance ministry's announcement on Thursday.
While the general VAT rate will go up, the government intends to keep the rate of VAT on other food products as well as restaurant meals at 14 percent, and will also make no change to the 10 percent rate on medicine, accommodation, books and cultural events.
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