Today, Emanuele Orsini, Vice President of Confindustria for Credit, Finance and Taxation, spoke at a hearing before the Finance Committee of the Chamber of Deputies on the Government's mandate for tax reform.

The qualitative indicators released at the beginning of 2023 provide more encouraging signs than at the end of 2022, but businesses continue to view the investment climate negatively.

The Bank of Italy survey for the first quarter shows that assessments of investment conditions have become less negative, both for industry and services (net balance of responses -17.6%, -45.0% on average in 2022) and for construction (-26.4% from -46.3%). However, the share of investment planning by businesses over the next six months is down (industry and services 14.7%, from 21.1%; construction 18.1% from 23.1%), although it remains historically high (8.3% and 2.9% in 2019).

The expansion of investment in 2022 was achieved mainly through +37 billion from businesses, but also thanks to +14 billion in structural spending on housing by households.

In this context, it is necessary to start afresh with a comprehensive overhaul of the tax system, geared towards growth, support for investment, reduction of the tax burden and legal certainty.

We appreciate the methodological approach adopted in the draft law. In fact, it is an approach that aims, within a well-defined time frame, to achieve intervention overall reform of the tax system to which companies are prepared to give a concrete contribution; For this reason, we appreciate the reference in the bill to the possibility of resorting to tables technicians with trade associations for the drafting of legislative decrees.

PRIORITIES FOR BUSINESSES

IRES

The proposal for an’Double-rate corporation tax – with a base rate that is hopefully lower than the current 24% – is to be welcomed with interest, also with a view to greater capitalisation of companies, even if it is not currently possible to give an overall assessment given the lack of detailed information on the design of the new tax and, in particular, on its concrete impact in terms of corporate taxation.

Any reduction in the rate linked to a increase in employment should take into account the profound differences between production sectors (not all of which labour-intensive), but also the investments made in recent years towards greater digitalisation. It could, for example, be useful to identify a mechanism that facilitates the entry of young people and women in the world of work (increasing women's participation in the world of work is also a way of countering demographic decline); furthermore, specific initiatives to support new entrepreneurship and to the training Personnel: the latest data (ISTAT and European Commission) show rising employment in Italy, but a shortage of labour for many companies that need qualified and trained personnel.

Qualified investments must also be defined: in this selection, it will be necessary to take into account existing incentives and the differences between digitised production sectors and traditional sectors; in addition, appropriate corrective measures will have to be considered for entities that do not pay IRES (corporate income tax) and to regulate complex intertemporal profiles.

TAX LOSSES AND INTEREST EXPENSES

We welcome the criteria set out in the delegation regarding tax losses e interest expense, because these are issues on which Confindustria has been calling for action for years. Currently, there is no regime for carry back tax losses, but we hope that it will be included in the implementation phase of the delegation., in line with what already occurs in other European tax systems.

Another commendable aspect is the’ rapprochement between civil and fiscal values, which should guarantee businesses a greater simplicity in determining the tax burden based on the balance sheet data.

IRAP (regional business tax)

The government's intention to replace the’IRAP (regional business tax) with a IRES surcharge causes concern. IRAP is a tax levied on capital invested in a business, affecting companies that are heavily indebted or operating at a loss. In addition, the tax is not deductible, except for a minimal portion, from income tax, placing an additional burden on companies in terms of both tax liability and compliance. In light of the numerous critical issues surrounding this tax, Confindustria has been calling for its abolition for years.

However, replacing IRAP with an IRES surtax would effectively cancel out any benefit of the dual-rate IRES e would place Italy among the European countries with the highest corporate income tax rates, significantly above the EU average, with negative effects on international competitiveness and the attractiveness of the Italian tax system.

IRPEF (personal income tax)

With regard to the’IRPEF (personal income tax) We appreciated the Government's decision to proceed with a gradual reform of the current system, in line with current public finance constraints. With a view to supporting domestic demand, which is strategic for our country's growth, We believe that the measures to reduce the tax wedge adopted by this government in 2023 must not only be structural, but also accompanied by measures to reduce taxation on individuals.

For these reasons, we appreciated the desire to simplify and rationalise tax measures on benefits provided to employees (so-called corporate welfare) as it could open the way to new measures to support sustainable mobility (e.g. car sharing, car pooling, mobility bonuses), in line with European environmental sustainability objectives. The decision not to intervene in the system of tax incentives for supplementary healthcare was also welcomed. The latter is a fundamental element in maintaining the Italian healthcare system.

In addition to this, new measures should not be ruled out in favour of companies that set up corporate welfare plans for purposes of particular social relevance (e.g. measures in favour of children, support for elderly family members, extensions of supplementary health coverage) in order to make a concrete contribution to the progress and well-being of the country. More Doubts arise regarding the proposal for an “incremental” flat tax on employees' contractual increases. A system that would be difficult to implement. In view of this, we propose instead to increase the tax relief on performance bonuses, in addition to updating the items that are not subject to personal income tax, which have remained unchanged for over 25 years.

Careful consideration should be given – also with a view to avoiding discrimination – to the possibility of making certain tax and other benefits conditional on a sort of “adjusted ISEE” that also takes into account income subject to substitute taxation regimes.

VAT

We welcome the ambitious reform project outlined in the draft bill., However, driven by the objective of aligning national legislation with EU provisions, the objective of aligning taxation on similar goods and services should be extended and reconciled with the ongoing discussions on VAT exemption treatments, whose areas of application should be reviewed as a whole and updated to reflect new social and economic contexts.

We also appreciate the objectives of simplifying/eliminating tax compliance requirements (e.g., acceleration of refunds, which Confindustria has been requesting for years), although, in this case too, we hope that these will not result in isolated measures but will lead to a general simplification of procedures.

FINANCIAL COVERAGE

The issue of financial coverage for the implementation of tax reform remains unclear.

A primary source of revenue could come from the revision of tax breaks, known as. tax expenditures (626 according to the latest MEF 2022 report) which, however, must be addressed with the utmost care and not exclusively on a financial level. It is necessary, in fact, to assess what the objectives are. national economic policy (strategic manufacturing sectors) and European (e.g. digital, energy and environmental transition), bearing in mind that our country already suffers from competition from other Member States that have fewer public finance constraints and can use more resources for aid.

With reference to the 226 tax credits to be reduced in order to recover resources It should be noted that many of these measures have been introduced on a temporary and extraordinary basis over the last three years to support taxpayers affected by the negative economic effects of the pandemic and rising energy prices. In the field of research, for example, the use of automatic tax instruments also makes it possible to finance research carried out by companies in all areas, promoting an increase in the quality and overall competitiveness of products, processes and services. Meanwhile, tax incentives to support private investment have played a key role in the process of transforming the manufacturing sector in terms of digitalisation and environmental sustainability (industrial processes that are not yet complete). Therefore, while safeguarding certain instances similar to those mentioned, there are certainly areas in which rationalisation would be desirable, but without resorting to drastic measures that neglect the need for legal certainty and investment planning.

QUERIES

We agree on the need to review the application dynamics of this instrument., whose proliferation in recent years has reached worrying levels (from September 2018 to date, just over 3,000 responses to queries have been published on the Revenue Agency's website, compared to 135 circulars). Taxpayers should not be required to bear the cost of a lack of coordination between these administrations and the Revenue Agency or the absence of clear interpretations. In this regard, we hope that the measures taken on cooperative compliance e codification may lead to effective results in terms of legal certainty for all taxpayers.

We place our trust in the draft law's announcement of a thorough overhaul of the tax penalty system, both in criminal and administrative terms and in relation to all taxes. The proposals to revise administrative penalties in order to reduce their burden are positive, in accordance with the principle of proportionality and bringing them into line with the regulations of other European countries. With regard to criminal profiles, it is proposed that failure to pay taxes be decriminalised if it can be demonstrated that this was due to circumstances beyond the taxpayer's control. Some decisive measures are lacking with regard to extended confiscation, the criminal relevance of false declarations and the thresholds for punishment for undue compensation of tax credits.

More generally, the penalty system should be appropriate to dFinally distinguish between unintentional violations and errors and those characterised by fraudulent intent.

The bill extends the regulation of tax settlement in coordination with the new corporate crisis code: however, this extension is still incomplete because it should also cover institutions not currently included, even using regulatory vehicles that are more readily approved.

In order to promote Italian industry, we believe that any fiscal measures should be aimed at development of energy efficiency and low-carbon technologies throughout the entire supply chain, from production to use, according to a technology-neutral approach, which can simultaneously achieve environmental sustainability and economic and social objectives.

With reference to the topic of building bonuses Confindustria hopes that a more extensive project to review incentives for private construction, taking into account both the consolidation of public finances planned for the coming years and the decarbonisation and energy efficiency targets for the real estate sector. In other words, a strategy is needed that is sustainable for the public budget and, as such, stable and long-lasting, in order to accompany the transition in a gradual and steady manner. green.

Concerning the culture sector, the references contained in the draft law are appreciable, but it would be appropriate to take more decisive action, for example by extending the scope of an existing measure, such as the’Art Bonus, which has been very successful and meets high standards of patronage and care for our splendid cultural heritage.