UPDATE 1-Italy budget to lift infrastructure amortisation cap

Tue Jul 12, 2011 6:42pm BST

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* Italy to axe measure that hurt infrastructure groups

* Government to compensate by cutting deductions over fund

(Recasts, adds details)

ROME, July 12 (Reuters) - Italy's budget will be modified to remove a 1 percent ceiling set on the amortisation of certain infrastructure assets, the government said, in a move that boosts companies such as toll road operator Atlantia .

The initial plan to allow only 1 percent of an asset's cost would have raised the tax bill for companies since it would have prolonged the period over which they would have had to deduct the cost of motorway assets.

The government will compensate for the lack of savings by cutting the options for tax deductions related to a so-called "clean-up fund" that infrastructure groups pay into, the head of a Senate commission, Luigi Grillo, told Reuters.

Prime Minister Silvio Berlusconi's government backtracked on the amortisation ceiling plan -- which sent shares of Atlantia to a 13-month low -- after an outcry from infrastructure groups, which said it would hamper investments in the country. (Reporting by Giuseppe Fonte and Stefano Bernabei; Editing by David Hulmes)