According to Tax-News, Italian Premier Matteo Renzi, a member of the center-left Italian Democratic Party, stated that he wants to see Italy’s corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. rate reduced.
“He noted that the combined rate of the Italian corporate income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. (IRES) and regional tax on production (IRAP) reaches 31.4 percent. Lowering this burden to 24 percent would enable Italy to go from one of the burdensome countries in the European Union to one of the most competitive.”
His goal is to get the Italian corporate income tax rate to 24 percent by 2017 to show that Italy is no longer a country of high taxation.
According to our International Tax Competitiveness Index, Italy’s tax code is currently one of least competitive in the OECD and only slightly more competitive than the United States’ tax code. Its corporate income tax of about 30 percent is 5 percentage points higher than the OECD average, it has high property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es, and a burdensome individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. . A lower corporate income tax rate would certainly be an improvement for Italy’s tax climate. It would bring its rate well below other large European countries such as France (34.4 percent) and Germany (31 percent).
Read more about Italy’s tax code and International taxes here.Share