Government raises taxes

This draft provides a double increase of the income tax for companies that profit more than 20% of the turnover, and will triplicate this tax for companies that profit more than 30%. Different to what the Prime Minister had declared, the tax increase will not affect banks and telecommunications, but has been extended to all economic sectors, affecting all businesses, depending on the profit norm.

According to the explaining relation for this law, the tax increase will initially affect only 15 companies, which have had more than 20% and 30% profits.

Beside the big tax increase for the banking system, the government has undertaken another restricting measure, since this law will not recognize as deductible expenses the bonuses that banks give to their managers. According to the Minister of Finances, this maneuver has frequently been used by the banks to artificially increase their expenses, paying fewer taxes.

With this law, the government definitely rejects the flat tax, which has been considered as the top feature of their fiscal reform, less than four years after its enactment. The draft brings back the progressive taxation, although initially it will be used on a limited group of companies.

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