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Finer Details Of Italian Tax Cuts Agreed

by Ulrika Lomas, Tax-News.com, Brussels

18 March 2014


Following a Cabinet meeting on March 12, 2014, Italy's new Premier, Matteo Renzi, has provided extra detail on cuts to reduce the tax burden in Italy – measures that are intended to provide an immediate boost to the country's economy.

While further details will only be disclosed upon the publication of a draft decree, expected to be issued shortly, resources totaling EUR10bn (USD13.9bn) have been allocated by the Government to allow for an increase, from May 1, 2014, to individual income tax (IRPEF) deductions for employees earning less than EUR25,000.

This would add around EUR1,000 to the wage packets of some 10m taxpayers, which would be funded primarily through cuts to government spending.

With regard to reducing the tax burden on businesses, which would also be in place from May 1, 2014, the Government has decided to lower the regional tax on production (IRAP) by 10 percent, probably from 3.9 percent to 3.5 percent, at a cost of EUR2.6bn.

The decrease in tax payable by businesses will be financed by a hike in the rate of tax payable on financial income, from 20 percent to 26 percent. The tax rate on government debt will remain at 12.5 percent.

Renzi said that despite these measures, and those to be formulated later this year, the Government will still deliver on its commitment to the European Commission that it will maintain a deficit below three percent of gross domestic product.

TAGS: individuals | tax | business | employees | corporation tax | tax rates | Italy | tax breaks | revenue statistics | individual income tax | Europe

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