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Italian Cabinet Presents Tax Administration Decrees

by Ulrika Lomas,, Brussels

30 June 2015

The Italian Cabinet has issued further legislative decrees to give effect to tax administration and compliance reforms.

The reforms were fast-tracked ahead of the expiry of the special tax reform law delega fiscale, which allows the Government to pass changes without parliamentary approval.

The first draft decree deals with the simplification and rationalization of tax collection regulations, to promote voluntary compliance. For example, tax officials will be granted greater flexibility in offering taxpayers payment options, for instance by granting a four-year repayment period for due taxes in certain circumstances, up from three years currently.

A second decree provides for the restructuring of the Italian tax authorities to improve the efficiency of their tax assistance, advisory, and assessment services. It is expected that their assessment methods will become less invasive due to collaboration between tax offices. The affairs of businesses will be dealt with by a single authority, to avoid workflow duplication and delays.

The third decree issued by the Government revises the present system of penal and administrative penalties to take account of those taxpayer transgressions that, while illegal, are without fraudulent elements, and therefore less serious. On the other hand, criminal sanctions will be more severe if the taxpayer is found to have behaved fraudulently, such as when using false documentation.

A taxpayer will not be accused of criminal tax fraud below an unchanged minimum of EUR30,000 (USD33,200), or a value of undeclared business income of EUR1.5m (up from EUR1m). However, tax fraud will be assumed to exist if the total amount of fictitious tax credits or withholdings is greater than five percent of the tax payable. Administrative sanctions alone will be applicable below those thresholds.

The decree also stipulates that administrative penalties are to be graded. For example, if a delayed tax return is subsequently made within the date for the next return, the applicable penalty will be cut in half. However, the sanction will be increased by 50 percent in cases of fraudulent misconduct. Penalties will be reduced to one-third if the additional tax assessed is less than three percent of the original tax declaration.

Under the fourth decree, the Government is initiate a review of tax expenditures that erode the country's tax base, and the Government will increase transparency on actions to counteract tax evasion and their results.

The final, fifth decree looks to reduce litigation. The Government did not approve plans to update official property values, apparently on the grounds that it could have caused a significant increase in property taxes for many individual taxpayers.

While they do not require further parliamentary approval, legislative decrees issued by the Government under the delega fiscale must be examined within 30 days by a parliamentary commission, which has only a consultative role, and the Government then has the power to make a final decision in a subsequent Cabinet meeting.

TAGS: individuals | compliance | tax | business | tax compliance | property tax | law | real-estate | enforcement | legislation | Italy | tax reform | regulation | penalties

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