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Economists opted to deflate personal income tax and not lower the type of companies

Date: June 22, 2024 Time: 16:27:37

The deflation of Personal Income Tax (IRPF) and not lowering the Corporate Tax rate are some of the proposals that, in terms of fiscal policy, have been put on the table by the General Council of Economists of Spain (CGE ). Similarly, emphasis has also been placed on the need to review the taxation of dividends as a measure for Spain to gain competitiveness. These have been the main conclusions of the meeting ‘What fiscal policy model should Spain promote to be more competitive?’ carried out by the General Council of Economists of Spain (CGE).

In this meeting, chaired by the president of the CGE of Spain, Valentín Pich, the global director of Taxation of Iberdrola, Begoña García-Rozado, and the former director general of Taxes of the Ministry of Finance, Diego Martín-Abril, have taken part. He presented his suggestions on what tax policy the next Government of Spain should follow.

Thus, Martín-Abril pointed out that currently the corporate tax rate in Spain is “high”, but if you look at other countries, such as Germany, France and Italy, you can see how these countries “have higher rates”, for which reason he has stated that it does not seem to him “a priority issue at this time” to lower the tax rate and, in his opinion, it is “more of a priority” to review other disincentive issues, such as the taxation of dividends.

Modifying the types of Companies “is not a priority objective”

In this regard, García-Rozado has agreed, pointing out that the nominal rate of said tax is “at adequate levels” in relation to countries comparable to Spain, so it is not “a priority objective” and, in his opinion, priority should be given to recovery of tax incentives such as those aimed at promoting investments in efficiency and energy transition, as well as working to give greater legal certainty to the application of existing incentives such as R&D&I.

With respect to personal income tax, both have agreed that “personal income tax should be deflated” to adapt the rate to inflation because, if this is not done, there is a rise in taxes for all citizens, to which Martín-Abril has added that given the income forecasts for 2023, “it is possible”. Furthermore, it has been claimed that legal certainty and predictability are “fundamental” elements in the country’s legislative structure to ensure support for economic activity and regulatory stability of the economy in a “broad sense”.

Review the dividend policy

During the # conferences, emphasis was placed on the need to review the taxation of dividends as a measure for Spain to gain competitiveness. Thus, García-Rozado has affirmed that the “toll” that a Spanish parent is paying for the income it receives from abroad to distribute it to its shareholders is an “element” that the foreign investor looks at and can generate interest or disinterest in investing. On the other hand, he has highlighted that for a country to be interesting when it comes to investing, it must be attractive from a business point of view; regarding the profitability of the investment to be made and that has regulatory stability.

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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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