Tax reform, the review starts with corporate taxes – Corriere.it

The meeting of Minister Giancarlo Giorgetti with his team at the Ministry of Economy is set for today. But, after months of work mainly by Deputy Minister Maurizio Leo, the draft enabling law on tax reform seems to have reached an advanced stage. If he does not go to the Council of Ministers next week – a scenario that is always possible – it would only be because the meeting will take place in Crotone after the shipwreck of the migrants and in the meantime the text has not yet formally arrived at Palazzo Chigi.

However, it is already clear to everyone that it is about an in-depth review project of the tax infrastructure in Italy. It will not only concern the reduction from four to three of the tax brackets on personal income tax (Irpef), which indeed can only develop over the years. Nor will it limit itself to seeking cover by trying to prune the jungle of the current 626 items of tax breaks (at a cost of 83 billion, according to the Parliamentary Budget Office) which have only increased in recent years. That should come gradually, during the legislature, leaving out of the “fiscal expenses” that can be cut only social ones: health care, education, interest and other family expenses.

The tax bonuses

It is not yet clear how many savings there could be from this chaotic universe of tax exceptions, so as to be able to proportionally reduce the burden of personal income tax. Mauro Marean economist who has studied the problem for a long time and whose work the government pays attention to, estimates margins of no more than five billion. But this will be seen over time, precisely, because the tax reform should start from a different terrain: corporate taxation and, in parallel, a transformation of tax assessment systems in order to reduce evasion today estimated at between 75 and 100 billion euros a year.

The first front of the reform could be corporate income tax, IRES. And it could come into force together with the adoption in Italy, at the beginning of 2024, of the “Global minimum tax” on multinationals with a turnover of over 750 million dollars. The latter, thanks to an agreement between the advanced democracies of the OECD, foresees that the country of the parent company or the host country of a branch of a multinational company can add tax burden if the burden remains below 15%. That rate is therefore the minimum allowed.

The controls

Imagined by Maurizio Leo, the new IRES borrows part of this principle also for the smallest and all-Italian companies. The basic rate remains at 24%; but it can be reduced (potentially) up to 15% if the company, instead of distributing the profits to the shareholders, uses them in the following two years in innovative investments (model «Industry 4.0»), for expenses in proprietary software, in patents and designs ( «Patent box»), or if it uses those profits to hire the unemployed most on the margins of the labor market: people leaving the basic income, women or over-50s. There is concern in the business world that an incentive designed in this way will lead the Revenue Agency to review each budget item, effectively sitting in the cockpit next to the company’s managers.

Deputy Minister Leo, on the other hand, is counting on one simplification of companies’ relations with the tax authorities. For the smaller ones, the key should be a massive and cross-use of the databases available on billing or value added tax (VAT). On the basis of that knowledge, the Revenue Agency would propose on a large scale to medium-small businesses «biennial agreements with creditors»: in essence, a proposal for revenue for the next two years. If the firm does not accept, then it would be exposed to more intrusive scrutiny at any time.

For larger groups, however, the government plans to expand the area of ​​the so-called «cooperative compliance», already launched by the OECD. In every large company, a professional, internal or external, would be required to notify the Revenue Agency in advance of the possible risks of default: income abroad, reduced VAT or other. It is a kind of self-check of regularity, subject to checks. With more severe penalties for those who fail.

Thus the fiscal enabling law is taking shape in the Ministry of Economy, deliberately detailed enough to restrict the margins of maneuver of the parliament. The journey is not even at the beginning and will face many climbs — starting with the assault on the jungle of tax bonuses — which have already rejected many governments in the last decade. Certainly a confrontation with the interested parties could smooth out obstacles or mark yielding to the thousand, eternal, lobbies of Italy. At least, however, it would be a sign that the government, in economic policy, does not aspire only to navigate from one emergency to another.

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