The measure is to increase the percentage of progress payments for large companies.

The Council of Ministers has approved a package of measures aimed at reducing deficit. The two main measures to achieve this are to reduce drug costs and a partial reform of the current corporation tax. The Government believes that this measure will enable the State to prescribe about 2,500 million increasing payments on account to the largest enterprises.


Advance payments on account of Corporation Tax

Today, all companies are required to provide benefits to make three installment payments on account of Corporation Tax of each fiscal year, which are held in the months October, December and April. These payments are offset when the settlement is tax, which takes place in July, provided that the company’s fiscal year matches the calendar year.

The corporate tax reform approved by the Government is to raise large companies the percentage of their payments in installments, so that the Treasury will get more money in advance. The change affects large companies with a turnover of six million euros a year. These companies will not pay more taxes, since the rate of taxation will be the same so far, but will do so before.

The CEOE and the PP are opposed to corporate tax reform

The management of business CEOE (Spanish Confederation of Business Organizations) has shown the extent contrary to the view that the advance payment of tax remaining to financial companies and more at this time of economic crisis which is harder to get loans from banks. In this sense, the CEOE has ensured that Spain is the only major European Union economy in which banks are barely lending to businesses, especially small and medium size. People’s Party has not been good so far, as they believe that this way the Government to come out winner in the elections of November 2011 will collect less because of this reform that the opposition leader, Mariano Rajoy, has called ” fiscal outrage. ”

Salgado Minister defends his reform

For its part, the financial vice president, Elena Salgado Has ensured that this reform is just a small effort for big business, some of whom say they have consulted the measure. Salgado has called for greater civic responsibility in these times of crisis and pointed out that large companies support a nominal tax rate is below 30% and in some cases 20%.

According to Tax, Large companies have an effective rate in the corporation tax lower than the rest in relation to average the taxed. In addition, Treasury notes that the average rate of corporation tax for all businesses in 2008 decreased by 1.1%.

There are two ways to make installment payments on account of corporation tax: applying a 18% tax payable on the last tax paid, or as actual results that the company is taking during the year. Small businesses can opt for either of the two methods, but large can only benefit from the latter. In this case, the percentage to be applied is 21%. This partial reform of corporation tax will remain in force until 2013, the period of three years that the Government considers it necessary to adjust the deficit.