For three years the weight of taxes and contributions on the commercial profits of companies in Italy has been decreasing, but as they say in these cases the road to full fiscal competitiveness compared to the rest of the world and Europe is still very long. The snapshot of how oppressive the tax system is for local entrepreneurs came from the usual “Paying Taxes” report by the World Bank and Pwc. The maximum summary of the research work is to say that the overall tax burden for companies, summarized as Total Tax & Contribution Rate in Italy is 48% of commercial profits, an improvement of 14 percentage points compared to 2015.
The index summarizes the tax and contribution burden for businesses (not just the tax burden) and says that the overall position attributed to Italy is 112, out of 190 economies analyzed. Italy remains in a worse position than the world average (Ttcr at 40.5%), where however the weight is growing by 0.1%, and the European average (39.6%). Overall the opinion of the report is positive . As many as 52 economies have recorded an increase in the TTCR, while only 32 have seen it decrease and among these is Italy which “proves to be a competitive country compared to comparable advanced economies (Germany, Sweden, Belgium, France) which have recorded a higher Ttcr”. Then there is a methodological factor that could change the cards on the table: according to the World Bank, the provision of mandatory severance pay is considered a contribution that weighs on the indicator. If this were to be removed, the Italian TTCR would be 8.6 percentage points lighter.
The weight of taxes and contributions is not the only parameter taken into consideration: in fact, the report highlights that the average Italian company needs 238 hours for tax compliance (there were 240 in 2015), compared to a global figure equal to at 240 hours. However, the number of payments remains constant, equal to 14. A negative element for Italy concerns post-compliance, which reflects for example the time needed to request and obtain a VAT refund. In Italy, companies spend 42 hours on this practice, including the time spent responding to requests received during tax audits by the Financial Administration (18.4 hours the world average; 7.1 hours the average at European level). The waiting time for the refund is 62.6 weeks and covers a period of six months (26 weeks) between the purchase of the goods and the presentation of the annual VAT return (in the case study conducted by the report the company does not can request a tax refund on a quarterly basis). Globally the estimated time is 27.8 weeks; at a European level it drops to 16.4 weeks.
Fabrizio Acerbis, partner of PwC TLS, the firm that handles the Italian section of the report, stated in a comment note: “The data published today certainly confirms a positive trend”. And he notes that there are other possible methodological improvements: in the index “certain Italian legislative interventions aimed at strengthening production structures and reducing the overall tax burden are not reflected, in the basic case taken as reference. An example is the case of super-depreciation of 140% for the purchase of capital goods, the Patent box, credits for research and development. On the other hand, it must be said that some measures that are reflected (positively) in the data examined this year have no structural scope and can be reabsorbed with impact on the indicator”. Lastly, the expert underlines how “tax pressure and the cost of compliance do not exhaust the issues of taxation: the stability of the rules, the certainty of interpretation, the timing of litigation, directly influence the competitiveness of individual countries”.
Note: Paying Taxes 2018 takes into consideration mandatory taxes, duties and contributions to which a medium-sized company is subject in a given year, as well as the administrative burden of filing and paying taxes, and subsequent obligations. The taxes, duties and contributions analyzed include income taxes, social security contributions and employment taxes paid by the employer, property and transaction taxes relating to real estate, taxes on dividends, on capital gains, on financial transactions , on waste collection, on the circulation of vehicles and other minor contributions.Article from “La Repubblica”
