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Italy Cancels Possible 2016 Corporate Tax Cut

by Ulrika Lomas, Tax-News.com, Brussels

27 November 2015


Italy's Premier, Matteo Renzi, has confirmed that his Government will not be able to cut the rate of corporate tax in 2016, as any available funds will be needed for increased security spending.

In October, the draft 2016 Stability (Budget) Law had confirmed the Government's intention to reduce the Italian corporate tax rate from 27.5 percent to 24 percent in 2017. It was also indicated that approval would be sought from the European Commission (EC) for a more relaxed fiscal stance, which could enable part of the cut to be made in 2016, by lowering the rate to 26 percent.

However, Renzi has now confirmed that any leeway provided by the EC, particularly by way of an exclusion of additional Italian government spending on migration from next year's fiscal deficit calculations, would not be utilized for a corporate rate cut. His plan would be to divide the possible EUR2bn (USD2.1bn) available from that source between increased spending on security and cultural activities.

For example, he proposed that the EUR80 monthly tax bonus, which is presently given to each employee paying individual income tax and earning up to EUR1,500 per month, would be extended to all individual taxpayers who work for Italy's police and security forces, whatever their income.

TAGS: tax | economics | fiscal policy | budget | corporation tax | tax rates | Italy | tax breaks | individual income tax | Europe

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