THE MINIMUM CORPORATE TAX RATE WILL BE 23% AND 25% FOR BANKS
The Ministry of Finance has already provided the PSOE a draft tax increase that plans to apply this year on business and it will be harder than originally planned. The department Cristobal Montoro proposes setting a minimum rate on installment payments of 23% for companies with turnover over 10 million euros and a tax of 25% for banks intending to raise this year 8,000 million.
The Council of Ministers approved on Friday the measure announced by the government to combat the errors in revenue forecasting and move to Brussels signal that the government takes measures to reduce the public deficit. Initially, this was expected that the minimum rate of 23% will affect only companies that earn more than 20 million euros. Now the department Montoro has decided that applies from 10 million euros.
Thus, more companies will suffer the tax increase. Moreover, the minimum tax will be 25% for financial institutions. The Government's aim is to raise 8.000 billion euros, 2.000 million more than initially announced. The tightening of the tax increase reflects the urgency to correct the red. The latest data published by the Treasury reflect that the central government deficit reached 2.8% of GDP until August and exceeded the 2015 record of all.
The minimum bid rate on corporate income tax is not unknown for companies. The Government of Mariano Rajoy established from 2012, although the tax was 12%. However, the minimum rate was eliminated from 2016 and generated a fiscal hole that the government did not calibrate. In the first eight months of the year, corporate tax contributed 5,303 million, 31.8% less than the previous year. According to the budget estimates of Finance, the tax on corporate profits this year should provide 24,868 million, 20% more than the amount collected the previous year. The actual figure will be far below this level. That error in the forecast has worsened the poor performance of public accounts.
The Ministry of Finance says that setting a minimum rate on corporate income tax is not really a tax increase. This is because it is an advance. That is, companies will pay more in the current year and when presenting the annual declaration should pay less or entitled to a refund. However, if the measure continues over time, the actual effect is equivalent to a tax increase. The government's idea is that the minimum rate to be applied to 2018 depending on the state of public accounts. Experience indicates that such measures extending beyond the initially announced.