Corporate tax has become the considerable problem for governments around the world. In Spain, the new government of Pedro Sánchez is studying a measure that he already promised during his time in the opposition: to force companies to pay a minimum of 15% of their accounting result.
Preparing out the new Socialist Government’s two-year economic plan before parliament on July 17, Sanchez suggested that, by restricting the usage of subtractions, he would attempt to guarantee that companies pay effective corporate tax rates nearer to the headline rate of 25 percent.
Although a “harmonization at the community level” is being carried out, Sánchez wishes to introduce” a minimum rate of 15% of the accounting result of the multinational groups “, “review the reasons and special regimes with criteria of cost-benefit and equity,” and “create a tax on deviated profits.” This would directly affect the large multinationals that hardly pay taxes in Spain.
The procedure would be ‘succulent’ for the public since the large groups contribute 7.3% of their positive accounting result. In other words, their advantage is enormous, but thanks to the various exemptions, deductions, and adjustments they have at their disposal, they end up paying much less than small businesses and workers. Socialists want to request an effort from the big multinationals to finance the welfare state, and this is the star measure because it is the one that generates the most income.
The problem is that the Ministry would be taxing the profits abroad of multinationals for which they have already taxed in their country of origin. Spain, like the rest of the developed countries, has signed agreements to avoid double taxation, so that benefits are taxed only in the country in which they originate. Thus, a Spanish multinational that repatriates its dividend does not have to pay the Treasury again.
All of these actions are formulated in a plan by which the Government wants to create new taxation, “that adapts to the XXI century, conforming to the needs of the moment,”
Our advice, due to recent developments, consists of opening an offshore Company formation.
Company shareholders are not subject to taxation on any dividends they receive. You will have total freedom from all taxes and fees associated with running the company – including transfers of property, share dealing and other activities.
- Benefit from Zero corporate tax
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- No requirements for payment terms or company capital
- No obligation to file financial statements
JRaphael Corporate Consulting is always up to date with the latest developments in international business. Schedule a free consultation today to see how you can leverage our knowledge for your offshore goals.