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On April 1, Italy's Minister of the Economy and Finance, Pier Carlo Padoan, signed two decrees that modify Italy's "black lists," and announced on the same day that Italy and the Vatican had signed their previously agreed tax information exchange agreement (TIEA).
The two decrees follow the guidelines laid down in Italy's 2015 Stability (Budget) Law, which established amended criteria for the production of two black lists that, it is hoped, will boost economic ties with foreign countries.
Under the framework of Italy's controlled foreign company (CFC) regime, the black list now operates under two criteria: First, a territory will be included on the black list if the jurisdiction does not have an adequate TIEA with Italy and if it has an effective corporate tax rate that is at least 50 percent lower than the effective tax rate that would be applicable if the company was an Italian resident. Jurisdictions that have now been eliminated from the "CFC" list (in which profits realized by a foreign enterprise are deemed to be the profits of an Italian resident) are Malaysia, the Philippines, and Singapore.
The Stability Law specified another black list under which expenses incurred in transactions with residents in a jurisdiction would not be deductible. For this list, the criterion that such a jurisdiction should not have a privileged tax regime has been eliminated, leaving only the presence of an adequate TIEA with Italy as the determining factor.
The "non-deductibility of costs" list now therefore includes only 46 tax jurisdictions. 21 have been cancelled as already having TIEAs in effect, namely: Alderney, Guernsey, Jersey, the Isle of Man, Gibraltar, the British Virgin Islands, Anguilla, the Netherlands Antilles, Aruba, Belize, Bermuda, Costa Rica, the United Arab Emirates, the Philippines, the Cayman Islands, the Turks and Caicos Islands, Malaysia, Mauritius, Montserrat, and Singapore.
This second list still includes Switzerland, Liechtenstein, and Monaco, despite the fact that all have recently signed TIEAs with Italy. At the time it was indicated that completion of those TIEAs would be a prerequisite for Italians with undeclared assets in those countries to be able to enter into Italy's current voluntary disclosure program.
A statement from the Ministry pointed out that the signing of Italy's TIEA with the Holy See on April 1, which will be effective for fiscal periods after January 1, 2009, has a similar importance in that "certain Italian resident individuals and entities with financial assets held in the Vatican's financial institutions" will also be able to regularize those assets through the voluntary disclosure program.
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