The 2016 budget law that has now been approved includes reduction of corporate tax rate for 2017 and Country-by-Country (CbC) reporting requirements with amendments in Act n. 2111-B.
The Law no. 208 of 28 December 2015 provides a reduction of the applicable corporate income tax (IRES) rate from 27.5% to 24% for financial year 2017 and onwards.
CbC reporting rules require multinational entities (MNEs) to report, by country, the amounts of gross profit, taxes paid and accrued, and other indicators of effective economic activities. The actual reporting requirements are expected to be set out in an implementing decree which is anticipated to be issued within 90 days of the date of enactment of Italy’s budget law. The future decree is also expected to include details about the CbC due dates, filing instructions, and other procedural terms and conditions.
The budget law does not specifically state what is the first year for CbC reporting, but given the reference to the OECD recommendations, the CbC reporting would apply to FY 2016. Accordingly, MNEs would be expected to file their first CbC reports with their income tax returns for 2016.
