New Finnish tax laws reduce UPM's deferred tax liabilities

The deferred tax liabilities of UPM will decrease approx. EUR 170 million net as a result of changes in the Finnish tax laws. UPM will book this amount in Q2 of 2004 as a credit of taxes in the Profit and Loss Account and correspondingly as a deduction of deferred tax liabilities in the Balance Sheet. The change in the deferred tax liabilities does not have any immediate cash flow effect.

The Finnish parliament accepted today new tax laws, which after becoming effective, include a reduction in corporate tax rate from 29% to 26% from the beginning of tax year 2005, and a change in the treatment of capital gains and losses. As a main rule, capital gains realized on the sale of shares that are part of the fixed assets of a corporation are no longer taxable income for the corporation. Respectively, capital losses realized on the sale of these shares are no longer deductible. These new provisions concern transfers which took place May 19, 2004 or thereafter.

For further information please contact:
Mr. Olavi Kauppila, Senior Vice President, Investor Relations, tel. +358 204 15 0658

UPM
Corporate Communications
June 30, 2004