Company tax change approved

Spain's acting government yesterday approved the company tax reform by decree, which aims to raise an additional €8.000 million revenue and square the deficit at the 4.6% required this year.

“This is not a tax increase, but a change in the method of payment,” said the acting vice president of the Spanish government, Soraya Sáenz de Santamaría, in a press conference with acting Finance Minister, Cristobal Montoro, after the regular cabinet meeting. This change will mean that the minimum tax will almost double in some cases, and jumps from 12% to 23%.

The reform, which comes into effect immediately, will be applied to nearly 9,000 of the larger taxpayers. In the case of companies with a turnover of more than €10 million, they will be obliged to pay a minimum rate of 23% as from October.

Experts estimate that the change in taxation will mean a greater effort for the banks, which will be obliged to make installments of 25% on trading.

With the reform, the government hopes to raise an additional revenue of between €6,000 million and €8,000 million this financial year, which will be allocated to reducing the deficit to meet the expenditure ceiling set by the European Union at 4.5% of GDP.

Sáenz de Santamaría also said that the government is negotiating a bill in parliament to reform the financial and budgetary stability law, affecting the spending ceilings imposed on the regional governments announced last April, which is still awaiting approval. “It is important that they be able to maintain their level of public services,” she said. Cristobal Montoro added that “The autonomous regions have a target ceiling of 0.3% at preset” although the review of the deficit targets for the 2016 target period should be raised to 0.7%.