Italy: Fiscal Delegation: the text published in the Official Gazette

From personal income tax (IRPEF) to value-added tax (IVA), including collection and assessment procedures, the delegated law approved by the Parliament has evolved through new integration and clarification. Notably, a more lenient approach to penalties for cooperative taxpayers has emerged.

However, implementation remains ahead, with a 24-month window from enforcement to approve legislative amendments.

Novelties span the entire tax system, particularly impacting taxes, notably IRPEF. Tax brackets will be condensed from 4 to 3, along with a reorganization of tax expenditures. Regional Tax on Productive Activities (IRAP) will be replaced, and the Corporate Income Tax (IRES) will adopt a dual-rate structure. A rationalization of VAT is also foreseen.

The incremental flat tax for employees transforms into tax relief for bonuses, overtime, and productivity incentives. For VAT- registered individuals (partite IVA), installment options for November taxes are on the horizon.The Government is also urged to progressively phase out the "superbollo" vehicle tax.

Changes extend to compliance, collection procedures, assessments, and disputes. Reforms set the groundwork for simplifying, harmonizing, and reordering complex regulations.

The Structure of the Delegated Law for the 2023 Tax Reform

The macro structure of the original delegated bill remained largely intact through parliamentary proceedings, albeit enriched and adjusted.

The text is divided into five sections and, following input from the Chamber and Senate, comprises 23 articles.

The first section pertains to general principles, akin to precepts in the Civil Code, as noted by Deputy Economy Minister Maurizio Leo.

The ultimate aim is a "simpler tax system," as highlighted by the Deputy Minister during a presentation of the Italian Revenue Agency's accomplishments on March 9th. This event took place shortly after the text's submission to the Council of Ministers.

The second part delves into taxes. Leo emphasized:

"We review all taxes, starting from income taxes and proceeding to VAT, IRAP which should gradually be phased out, while also addressing minor taxes that often need consolidation and simplification. We also focus on local and regional taxes, customs, and gaming."

The Deputy Minister regards the most significant aspect of the reform to be the "procedures." The third part involves interventions in declarative, assessment, collection, and litigation procedures. Administrative and criminal penalty rules will also be rewritten.

The fourth part of the text entails rationalization and codification, culminating in Unified Texts that consolidate existing regulations.

Particular significance will be attributed to the Taxpayer's Statute, which is expected to become a general law, carrying more weight, for example, in terms of taxpayers' legitimate expectations.

Lastly, the text concludes with financial provisions.

The Additions Made in the Chamber to the Framework of the Tax Reform

Amid the deliberations of the Chamber of Deputies' Finance Committee, several new additions have enriched the framework of the tax reform.

The incremental flat tax for employees has morphed into tax relief applicable to:

Thirteenth-month bonuses

Overtime pay

Productivity bonuses

For these categories, taxation is projected to reach up to 15 percent, targeting lower income brackets.

Within the scope of personal income tax (IRPEF) reductions, emphasis is on supporting individuals under 30 years old to encourage stable employment. Beyond the youth, measures are primarily directed towards families with disabled members.

The scope of the intervention regarding the abolition of the "superbollo" on high-displacement vehicles has been downsized. The Government is solicited to evaluate the potential elimination of this tax, provided it doesn't adversely impact state revenue.

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