MADRID (Reuters) - Spain wants to increase its tax revenue from companies by scrapping exemptions which enable firms based in the country to pay some of the lowest taxes in Europe, Economy Minister Luis de Guindos said in newspaper interviews published on Saturday.
Companies can pay as little as 4 percent tax on their profits in Spain, despite a nominal rate of 30 percent, something the country has been repeatedly urged to fix by the International Monetary Fund and the European Commission.
“For corporates, the difference between the nominal and the effective rate is huge and we need to reduce the nominal rate and increase the effective rate by reviewing exemptions,” de Guindos said in a joint interview with business dailies Expansion, Cinco Dias and El Economista.
Tax reform is at the heart of Prime Minister Mariano Rajoy’s efforts to underpin a tentative economic recovery and help put close to six million Spaniards back to work.
Many analysts, however, believe it is also part of the ruling People’s party strategy ahead of local and general elections to be held next year.
The Spanish government is working on sweeping reforms aimed at increasing one of the lowest tax revenues in Europe and that it plans to pass in the first half of the year.
De Guindos confirmed that income and savings tax would be cut as part of the reforms while consumer and property levies were likely to be hiked.
He said the government intended to fully revert the income tax increase of between 0.75 and 7 percent that it decreed after just a week in office in December 2011 in order to control a growing public deficit.
Premier Rajoy - who also passed tough spending cuts and reformed labour laws and the public pension system, angering cash-strapped Spaniards - said the cut in income tax would take effect in 2015.
Reporting by Julien Toyer; Editing by Pravin Char