Finland’s VAT increase prompts varied pricing adjustments among online retailers

The recent rise in Finland’s value-added tax (VAT) to 25.5% has resulted in varied pricing adjustments across online retailers. In late August, Yle collected data on the prices of 140 products and services from 40 online stores and repeated this analysis on September 1. Most prices remained unchanged; however, 18 products saw price increases, with 10 rising more than the VAT adjustment itself.

Retailer Tokmanni offered five budget products, all of which experienced price hikes that exceeded the VAT increase. Although the data collection was random, Tokmanni’s marketing director, Veli-Pekka Ääri, noted that price adjustments were not uniform across the board. He stated that while some prices had increased, others had decreased, indicating significant variability influenced by shipping costs and raw material market changes.

Some stores did increase certain product prices, but less than the VAT hike. The analysis gives the impression that most product prices have not risen, suggesting that the VAT increase might reduce the retailers’ profit margins. According to Finnish Entrepreneurs, some small and medium-sized enterprises had already raised prices ahead of the tax change. A survey conducted in late August revealed that fewer than half of business owners were prepared for the VAT increase, and nearly half had already increased their prices, while 26% expected a decrease in profits due to the tax hike.

Synsam, an optical retail chain, has maintained most prices despite supplier cost increases, affecting profit margins slightly, as explained by CEO Vesa Mars. The tax increase also resulted in additional workload as adjustments to register settings were required.