This note analyzes the effects of the main provisions on corporate income taxation adopted in Italy in 2017: the reduction of the corporate income tax rate (IRES) from 27.5% to 24.0%, the temporal extension of the super-depreciation for new capital goods (the so called “maxi-ammortamento”) and the reduction of the allowance of a notional return on equity (the so called ACE allowance, “Aiuto alla Crescita Economica”).
For 2017 the cut of the IRES rate will reduce the tax burden for about 63.7% of firms (all firms with tax debt). The extension of the super-depreciation will affect 24% of firms; the percentage of beneficiaries is higher for industrial firms and increases with the company size. 38% of firms will be disadvantaged by the reduction of the ACE relief. Overall (considering the three provisions), the beneficiaries will be 55% of firms.
The reduction of the IRES rate will determine a linear tax cut of 12.7%, the extension of the
super-depreciation an average discount of 1.6% and the reduction of the ACE a tax rise of 4.2%. The extension of super-depreciation and the reduction of the ACE will jointly lead to an average tax rise of 2.6%, that decreases (until zero) as the company size grows. Overall, the three provisions will result in a tax cut of 10.1%.
In 2017 the effective IRES tax rate on before-tax-profits will decrease of 2.5 percentage points (median values).
Division for data analysis and social, environmental, economic research
Lorenzo Di Biagio
ph +39 06 4673.6120
ph +39 06 4673.7271