March 28, 2013 / 3:00 PM / 4 years ago

Finnish tax reform to prompt extra dividends in 2013 - analysts

* Tax on retail investors' bourse dividends to increase

* Sampo, Nokian Renkaat seen most likely to pay extra divs

* Analysts say tax will hit IPO hopes in Helsinki

By Jussi Rosendahl

HELSINKI, March 25 (Reuters) - The Finnish government's decision to increase tax on retail investors' dividends will encourage Helsinki-listed companies to announce extra payouts before 2014, analysts said.

It could also prompt small investors to switch out of equities and into other assets to avoid to tax, and deter firms from listing on the Finnish stock market, which has for years lagged Nordic rivals in terms of new issues, they added.

Finland's six-party government, led by the right-leaning National Coalition party, last week agreed a broad taxation reform that will cut corporate tax next year, while also increasing the tax rate on retail investors' bourse dividends from 21 percent to 30 or 32 percent.

"If the companies act wisely they will pay their excessive money out before the tax increases. I believe that will happen and we would see extra dividends in autumn," said Timo Rothovius, professor of finance at Vaasa university and the chairman of Finnish shareholders' association.

He said the most likely companies to announce extra payouts include insurer Sampo and tyre maker Nokian Renkaat .

Petri Ukkola, a fund manager at Tresor Investment Management, said the payouts could be widespread.

"I'm thinking about, for example, Elisa and Wartsila," he said. "Starting from next year, the companies will likely buy back more shares, and share more profits that way."

Other candidates include Kone, Kemira, Nordea, Raisio, and Fortum, said Pohjola Markets in an investor note.

In future, the corporate and dividend tax together would in many cases total 26 percent for unlisted companies, compared with 44 percent in the bourse, analysts said.

"It really doesn't pay off for a company to go to the bourse. The exchange is at risk of withering, which would have a big impact on companies' growth financing in this country," said Henri Elo, analyst at Balance Consulting. (Reporting by Jussi Rosendahl; Editing by Mark Potter)

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