Tax reform 2023, government green light: rates and flat tax, the news

Meloni: “Rewards loyalty and taxpayer responsibility”. Mef: “Operational within 24 months of the entry into force of the enabling law”. What changes

Green light from the Council of Ministers for the 2023 tax reform. “With the Irpef reform, horizontal equity is guaranteed, through the reduction of the tax burden, going from 4 to 3 rates and with the aim of a flat tax for everyone”, communicated the MEF, in a note, after the ‘ok government. The provision will also “guarantee the rationalization and simplification of the entire personal income tax system (agricultural, building, financial, employee, self-employed, business and other income). The delegation also provides for the revision of tax expenditures, which today includes more than 600 entries”.

It is a “necessary turning point for the country”, Prime Minister Giorgia Meloni told the ministers. “The fiscal delegation approved by the CDM completely rewrites the current tax system launched in the 70s”. The new rules will be operational “within 24 months of the entry into force of the enabling law”, the Mef again communicated. The measures that will be introduced, we read, “go in the direction of simplifying and reducing the tax burden, encouraging investments and recruitment and establishing a relationship between taxpayers and the financial administration in the logic of a targeted dialogue between the parties according to the needs of citizens and businesses “.

“The Reform contains an overall and programmatic vision that rewards the loyalty and responsibility of the taxpayer, laying the foundations for a new relationship of trust with the tax authorities. Thanks to the Reform of the tax system we lower taxes, increase growth and equity, we favor employment and investments”, Meloni said again, adding: “A real turning point for Italy”. “It is an epochal, structural and organic reform: a revolution that has been awaited for 50 years with important innovations in favor of citizens, families and businesses. With the new tax system, we outline a new idea of ​​Italy, close to the needs of taxpayers and attractive to companies” , he concluded.

Of “very ambitious reform”, he spoke Deputy Minister of Economy Maurizio Leo with which we “redesign the tax system”. “We have a whole series of measures aimed at reducing the tax burden and giving certainty in relations with the taxpayer” he said, expressing confidence in the fact that “even the trade unions can read with serenity all that” has been done “because there are so many measures in favor of employed work”. The three personal income tax rates will be operational “from next year”. “I would be cautious about the numbers because the enabling law does not dictate precise numbers, the implementing decrees will then identify them as well as the resources without making a budget overrun”, she explained. “From January 2024 a reform module will come into force, we will find the necessary resources and coverage, we have indicated the priorities and we will stick to them”, she underlines.

The news

IRPEF – A revision of the entire personal income taxation mechanism is envisaged, in order to gradually implement the objective of “horizontal equity”, through the identification of a single tax exemption band and the same tax burden regardless of the different categories of income produced, favoring, in particular, the equivalence between income from employment and pension income; the recognition of the deductibility, even in a lump-sum amount, of the expenses incurred for the production of employment and similar income; the possibility for all taxpayers to deduct the mandatory social security contributions when determining the category income and, in the event of inadequacy, to deduct the excess from the total income; the application, instead of the rates for income brackets, of a substitute tax of the Irpef and related surtaxes with a reduced rate on a taxable base commensurate with the increase in income in the tax period compared to the income for the highest period among those relating to the three previous tax periods, with the possibility of setting limits to the eligible income and a special regime for employee income which facilitates the income increase of the tax period compared to that of the previous tax period; the consequent overall revision of tax expenditures (currently 600 items and 125 billion euro of expenditure).

IRES – The revision of the corporate and corporate income tax system will be based on the reduction of the IRES rate if, within the two tax periods following the one in which the income was generated, both of the following conditions are met: a sum corresponding, in whole or in part, to said income is used in investments, with particular reference to qualified ones, and in new hires; the profits are not distributed or destined for purposes unrelated to the exercise of the business activity. The condition, linked to the execution of the investments, has the clear purpose of promoting economic growth and the increase in the employment base, with particular reference to subjects who need greater protection, including people with disabilities, and without interfering with the current tax relief regimes. In this case, unlike what ordinarily occurs for the use of tax incentives, the reduction of the rate precedes the execution of the investments. The latter must be implemented within the two tax periods following the one in which the income subject to tax at the reduced rate was produced.

VAT – For the revision of the value added tax (VAT), the specific criteria envisage the revision of the definition of the conditions of the tax in order to make them more compliant with the legislation of the European Union and with the rules of exemption; rationalization of the number and extent of tax rates; the revision of the discipline of the deduction; the rationalization of the discipline of the VAT group in order to simplify the measures foreseen for the access and application of the institution.

IRAP – A comprehensive review of IRAP is ordered aimed at repealing the tax and at the same time setting up a surtax for IRES so as to ensure an equivalent tax revenue, to guarantee the financing of health needs, as well as the financing of Regions with budgetary imbalances health care or who are subject to repayment plans.

TAXPAYER’S STATUTE – The Taxpayer’s Statute is reviewed, with a consolidation of the principles of the legitimate expectation of the taxpayer and legal certainty, envisaging the strengthening by the taxing body of the obligation to state reasons, specifying the evidence on which the claim, and the right of access to the documents of the tax proceeding, functional to the correct deployment of the right to be heard.