In March, Italy’s Council of Ministers approved a set of general principles and criteria for future reform.
What changes might follow?
- complete overhaul of classical taxes (IRES, НДС и IRPEF);
- reduction in the number of deductions;
- refusal of criminal penalties for tax evasion associated with objective reasons beyond the control of the taxpayer.
The government hopes the changes will make the system more manageable and make it easier to tackle tax evasion, which cost the country €90bn in 2020, according to the latest Treasury data..
Innovations will also affect the system of taxation of individuals. The Italian government wants to establish a single range of fiscal benefits and the same tax, regardless of the category of income received:
- wage labor;
- real estate;
Interestingly, it is planned to reduce the tax on income of companies and organizations from 24% to 15%. And it will be possible to receive a benefit if legal entities within two tax periods are able to fulfill the following conditions:
- Income (in whole or in part) is used to invest in the business or hire new staff.
- Profits should not be distributed or directed to activities that are not related to the conduct of commercial activities.
The changes should also affect VAT, or rather, it is planned to optimize the number and size of tax rates, revise the criteria for those who must pay taxes and who should be exempt from them, simplify the rules for applying VAT and change the deduction mechanism.
It is worth paying attention to the possible introduction of a flat tax of 15%, which should be applied to all employees. Now this tax is applied only to a few categories of payers.:
- self-employed citizens
- individuals of certain professions (notaries, lawyers, accountants, etc.)
- people who work in the arts
It is expected that the reduction of the tax burden will favorably affect the economic growth in the country and the birth rate.