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Andorra Presents 2013 Budget

by Ulrika Lomas,, Brussels

15 October 2012

Andorra’s Finance Ministry has announced its 2013 budget which increases social spending and investment while cutting the deficit.

As part of its 2013 budget, Andorra is set to shrink its deficit from EUR63m (USD81m) in 2012 to EUR45.5m in 2013. Ultimately, the government plans to bring the budget back to balance in 2015.

However, the recent introduction of direct taxes in the jurisdiction has allowed the government room to boost its investment spending by a massive 30% and increase welfare spending.

Direct tax revenues are expected to rise to EUR72m in 2013, up from EUR25.8m in 2012. This comes in light of Andorra’s gradual implementation of its own corporate tax system and income taxes on non-residents. Overall tax receipts in 2013 are expected to total EUR363.8m.

Under the Corporate Tax Act 2010, resident businesses in Andorra pay corporate income tax at a rate of 5%. Non-resident businesses pay 10% corporate tax under the Taxation of Non-residents Act 2010.

It also expected that a value-added tax regime will be introduced on January 1, 2013, with a standard rate of 4.5% and a reduced rate of 1% on certain essential goods and services such as food, water, medicine and health services. However, it is anticipated that a higher rate of 8% will apply to banking and financial services.

TAGS: tax | investment | law | banking | budget | offshore | offshore banking | Andorra

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