Italy VAT rise looking unlikely

Italy VAT rise looking unlikely

Having already increased the VAT rate to 22% in 2013 Italy was facing another VAT increase to 24% in 2016, with an even further potential increase to 26.5% in 2018. This increase was proposed as the Italian total debt has continued to rise in recent years, and was looking to rise to 130% of GDP in 2015. Italy failed to reduce spending enough so as to reduce its deficit as a percentage of GDP to below 3%, which is a basic requirement for membership of the Euro currency.

However, the European Commission has now indicated that it will not enact any sanctions or penalties on Italy if it fails to meet its targets, having already done similar for Belgium, meaning that Italy would not have to enact the proposed VAT increases, especially if its meets its new forecasted growth rate of 1.4%, up from 1%, which would therefore bring its deficit GDP rate to just below 3%.

For further information please see  previous eBiz posts:

Italian Vat Rumours and Russian Sales Tax