Spain’s government has approved plans to cut the tax rate for large companies from 30 percent to 28 percent on Jan. 1, 2015, and to 25 percent beginning in 2016, bringing it in line with the levy imposed on small- and medium-sized enterprises.
Finance Minister Cristobal Montoro unveiled the changes after Friday’s Cabinet meeting, saying the goal was to bring the effective tax rate closer to the nominal rate by eliminating some exemptions, though adding that R&D-related deductions will be reinforced.
He said another change will allow companies to allocate up to 10 percent of their profits to a tax-exempt reserve, adding that the goal of that provision is to promote “self-financing” and reduce companies’ leverage, one of the ruling conservative Popular Party’s campaign promises.
Also Friday, the government approved a 12.5 reduction in the average income tax on workers starting on Jan. 1, 2015, in a bid to boost consumers’ disposable income and create employment.
The Iberian nation, which was battered by the 2007 collapse of a decade-long property and construction boom and the subsequent global recession, emerged from a double-dip recession last year but economic growth has been slow and insufficient to dent a high jobless rate of around 26 percent.
After taking office in December 2011, Prime Minister Mariano Rajoy’s administration initially focused on reducing a high budget deficit to bring it in line with European Union mandates.