The fourth ethical principle of the construction industry tackles the gray economy and aims to create healthy competitive conditions for everyone. The impact of the actions taken in the field has already been palpable.
The Norwegian Tax Administration, together with Rakennusteollisuus RT and Rakennusliitto, have started this decade to combat the gray economy on a broad front. It's not just about getting the tax revenues that belong to the state, but also about improving general tax morale and the competitiveness of honestly operating companies.
Despite all the measures taken, in the 2016 survey of companies in the construction sector conducted by the Ministry of Labor and the Economy, more than half of the respondents still considered the competitive disadvantage caused by the gray economy to be at least moderate. 75 percent believed that they had lost a tender at least once to a potential gray economy practitioner.
The results of the member survey regarding Rakennusteollisuus RT's ethical guidelines, conducted in January 2018, showed that the actions have now begun to bite even better. 27 percent of the respondents considered the share of the gray economy to be at least moderate, and almost 60 percent felt that it was already quite small.
Oppose the gray economy
Promote healthy competition and the operating conditions of companies that manage their obligations responsibly. Comply with labor, tax and accounting legislation, the Subscriber Liability Act and other laws and collective agreements. Require that all your contractual partners and actors in the contract chain act in the same way.
The gray economy refers to otherwise legal business or business activities for which no statutory payments or taxes are paid. The gray economy is most common in labour-intensive sectors, such as construction, accommodation and catering and the transport sector.
Typical forms of the gray economy in the construction industry are receipt trading, VAT fraud and neglect of the Buyer's Liability Act. A key challenge in the construction industry is a high degree of subcontracting and chain-like operations. For this reason, the fight against the gray economy is rightfully also one of the common ethical principles of the industry.
Your own actions bite
For years now, RT has actively and proactively together with Rakennusliito pushed forward voluntary actions and legislative changes to eradicate the gray economy from the sector. By establishing Suomen Tilaajavastuu Oy, effective tools have also been created to facilitate the handling of obligations. These means have clearly improved the market and collected taxes for society.
In 2017, the tax administration's gray economy investigation unit investigated the effects of the legislation on the obligation to disclose construction contract and employee information.
According to the results of the survey, legislative changes in the construction industry implemented since 2011, such as the reversed VAT liability, tax number register and contract and employee reporting, increased the wages of the construction industry by a total of approximately 300 million euros in 2015. Tax revenue increased by 100 million in the same year.
The next step is the national income register in 2019. It is also intended to lighten the administrative burden on companies when the availability of information improves. However, no article or tool works on its own, the decisive factor here is the attitude and the desire to make full use of them.
See also
- Pohjola Rakennus Oy Häme's Miika Oksanen: "The next step in combating the gray economy could be to try rewards instead of sanctions"
- Other parts of the Ethical Principles in Practice writing series
More information
- Merja Vuoripuro, Construction Industry RT ry
tel. 040 587 2642, merja.vuoripuro@rakennusteollisuus.fi - Sari Puurtinen, Juuriharja Consulting Group Oy
tel. 040 676 3772, sari.puurtinen@juuriharja.fi
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