No Reduction To Italian Corporate Taxes In 2010 Budget

by Ulrika Lomas, Tax-News.com, Brussels

01 December 2009

The Italian government, including Giulio Tremonti, Minister of the Economy, has confirmed that there will be no reduction to corporate taxes in the 2010 budget bill, currently on its way through parliament.

Following a recent announcement allowing a delay in interim personal and small business income tax (IRPEF) payments, it had then been expected that, at the least, the payment deferral would also involve the state and local corporate income taxes (IRES and IRAP, respectively). In addition, there has been continual talk of phased cuts in IRAP since hints given to that effect by the Italian Premier, Silvio Berlusconi, in October.

However, any action at all on corporate income taxation has now been ruled out, with any prospect of reductions classified as being “outside of the budget” in the name of fiscal prudence.

It has been disclosed that the government expects to have only EUR4bn (USD6bn) of additional revenue available this year from the penalties imposed by the present tax amnesty. That would be less than half the amount that had previously been predicted.

It would also imply that funds declared under the amnesty will only reach some EUR80bn; rather less than the previously-estimated EUR300bn of total undeclared assets held by Italians abroad.

In any case, Giulio Tremonti has been reported as saying that any spare revenue which could now become available to the government, would be not be spent on tax reductions, but on other priorities, such as social security and welfare spending.

However, moves in the area of corporate tax could be further discussed next year, according to reports, depending on the future state of public finances.

Recommended