Problems relating to Trade and Investment on Italy
14. Taxation Systems |
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Issue |
Issue details |
Requests |
Reference |
| (1) Complexity of the Taxation System | - Tax calculation is extremely complex. Two kinds of corporate income tax exist on different taxable items, IRES (corporate income tax) and IRAP (regional income tax), which make tax calculation difficult. IVA (VAT) system is also extremely complicated. The taxation system is nebulous and risky, as competent taxation authority brings out unexpected issues. The Agenzia delle entrate (inland revenue) maintains extremely rigid stance. The lost judgements at the court of the 1st instance and appellate court would not prevent it from bringing the case, as usual, up to the supreme court. It spoils the business environment as it takes a long time for completing court proceedings. Moreover, inland revenue's of paucity of appreciation in international transfer price taxation system (TPTS) frustrates application of international standard in dealing with TPTS issues. | - It is requested that GOI takes steps to simplify and streamline the taxation system in Italy. | |
| (Info) - Standard rate of Value Added Tax (VAT or IVA (Imposta sul Valore Aggiunta) in Italian) is 21%, while reduced rate of 10% or 4% applies mainly to the bare bone necessities. Reduced IVA rates: -- 10%: farm animals, meat, ham, wheat flour, rice, drug, fertiliser, foliage plant, fruits, fresh fish, movie, eggs, vinegar, sugar, etc. -- 4%: black tea, medical equipment, fresh vegetables, milk, margarine, cheese, butter, books, newspapers, olive oil, bread, pasta, etc. |
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| (2) Bank Guarantee Requirement for VAT Refund | - Upon application for VAT refund, the Italian Tax Authority (ITA) demanded submission of bank guarantee for the entire VAT refund period. This scheme, not found elsewhere in the rest of EU member states, necessitates additional workload and expenses upon the applicant, including guarantee fees. | - As stated in the left column, EU seems to have taken a formal action already, holding that the ITA's requirement is unjustified. It is requested that ITA takes prompt action to comply with the EU decision. | - Italian VAT Law (?) Ref: PwC Audit, Tax and Consulting Services (the 2nd half portion) at: https://www.news-pwc.be/transitional-regime-extended-for-the-year-2014-opening-of-infrindgement-procedure-against-italy/ |
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