After intense days of negotiation, PSOE and United We Can have reached an agreement so that the General State Budgets of 2022 are approved this week, in an extraordinary Council of Ministers scheduled for Thursday. Several issues that faced the two parties have been resolved this Tuesday, among them the setting of a minimum rate of 15% in the corporate tax defended by United We Can, which is proposed to apply only to multinationals and companies that bill above of a certain threshold.
Different government sources assure that the fiscal change in the tax will be designed in line with the proposal included in the 2019 Budget project, which crashed in the parliamentary process and never saw the light of day. It contemplated setting a tax floor of 15% on the positive tax base ―18% for banks and hydrocarbon companies, whose type of companies is 30%, compared to 25% that applies to other companies―, the The magnitude on which the corporation tax obtained after applying various adjustments to profit is calculated, such as offsetting negative bases or applying exemptions for double taxation of dividends.
According to the last Annual Collection Report from the Tax Agency, the effective rate of tax paid by companies is 21.44% on the tax base; 19.07% in the case of large groups. So, if the minimum rate were set on the tax base, the collection that would be achieved with the measure would be meager. If the benefit is taken into account, the percentage is 8.2% in the first case and 5.11%. According to the report Country by Country Published on Monday by the Treasury, which breaks down how much groups with incomes over 750 million pay to the treasury worldwide, one in three Spanish multinationals paid less than 10% of their global profit in 2018 in corporate tax.
The minimum rate of 15% that will be incorporated into the Budgets would apply only to consolidated groups and, in the case of companies that are not part of groups, to those with a turnover equal to or greater than 20 million. The Budgetary Plan for the 2019 accounts that the Government then sent to Brussels did not break down what collection the fixing of a minimum rate of 15% would contribute. It only offered an estimate of the income that this measure would jointly provide and the limitation of the exemption from 100% to 95% for double taxation: 1,776 million.
In this year’s accounts, which were processed in a 2020 marked by the pandemic, a minimum type of companies was not introduced, but the limitation of exemptions to dividends and capital gains was included to 95%, although excluding for a period of three years to companies with a turnover of less than 40 million euros. The Government estimated for this measure a collection of 473 million this year and 1,047 million next year.
The secretary general of Podemos, Ione Belarra, warned two weeks ago that the agreement with the PSOE on the Budgets was still “far away” and that for the purple formation it was “essential” to set a floor on corporation tax. His statements clashed squarely with the position held until then by the socialist camp: awaiting the conclusions of the committee of experts for tax reform, scheduled for February next year. Finally, the two partners have agreed to give the green light to the measure.
Podemos also defended that the OECD and the G-20, which are the organizations that are negotiating at the international level how to raise the taxation of multinationals, have already agreed with more than 130 countries on the imposition of a minimum type of companies of “at least” 15% of the profit of multinationals with a turnover of more than 750 million dollars. However, the details of the base that will be taken into account to calculate the tax, and that will determine the extent of its collection, remain to be decided.
Less tax incentives in pension plans
The government also plans to once again cut tax incentives for individual pension plans. In the 2021 Budgets, it has already reduced the maximum deduction limit for contributions, from 8,000 to 2,000 euros —in collective plans, on the contrary, it raised it from 8,000 to 10,000 euros—; by 2022 it plans to reduce it even more, to 1,500 euros. This measure had been recommended by the Fiscal Authority in its analysis of public spending. The agency suggested reviewing the incentives because they do not fulfill their purpose, that of promoting private savings complementary to the public system, since they mainly benefit high income.