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--Extra Tax Revenues Towards New Budget Law, Deficit Reduction
By Silvia Marchetti
     ROME (MNI) - Italy's government aims to raise extra tax revenues this year
thanks to the regularisation of foreign-held capitals through so-called
"voluntary disclosure" procedures. Extra tax cash would got into funding both
the new 2018 budget law under definition and in further curbing public deficit. 
     Several officials told Market News they were confident of achieving good
results by year-end through the voluntary disclosure scheme, which they said was
neither a legal repatriation nor an amnesty on "black capital" hidden abroad.
     "Last year we raised over E4 billion through such procedures, these
revenues have helped to fill state coffers and we expect to bring in more cash
in coming months. So far the voluntary disclosure has been a success, each year
results are better and we believe we will have a great outcome this year too,
which pushes us to continue along this path," said a Treasury source. 
     Initially launched in 2015, the voluntary disclosure scheme has already
been renewed twice and the 2017 closing date has been extended to end of
September in a bid to pull in more potential tax-payers. 
     A total of 129,000 overseas capital regularization requests reached Italian
authorities last year, mostly from Switzerland (69.6%), Monaco (7.7%), and the
Bahamas, according to Treasury data. 
     This new approach is a revolution in the way Italy has so far handled
undeclared overseas capital taxation. 
     "We have had a few 'fiscal shields' in the past to repatriate foreign-based
capitals, which is not the right solution in cracking-down on tax dodgers and
boosting tax revenues in the long run," said the Treasury source. 
     The voluntary disclosure has turned out to be more efficient. It is a
communication to the Italian tax authorities of money held in other countries
which will stay in those countries but whoever detains this capital will have to
pay taxes to the Italian state forever, the source explained. It's simple and a
stable source of tax revenue.
     Democrat Giampaolo Galli, member of the Lower House Budget Committee,
pointed-out how it is not a "one-off" but a "permanent" measure that would
benefit state coffers indefinitely with permanent tax revenues. 
     "Once someone has flagged his offshore capital to Italian authorities, he
can still keep these in deposits on the other side of the world. He's not
obliged to bring the capital back home but will from now on pay taxes on these
to the Italian state," said Galli.
     The voluntary disclosure is part of the government's new strategy to
crack-down on tax avoidance by involving potential tax payers without scaring
them by means of penal action, but by making them an active part of the process
in order to avoid future trouble, said the Treasury source.
     Making the tax man appear more "friendly" has certainly had a positive
impact. The number of Italians abiding by the new scheme is on the rise, and tax
revenues from voluntary disclosure have jumped significantly from just E212
million in 2015 to over E4 billion last year, according to Treasury data. 
     "It's a mere form of communication aimed at identifying undeclared capital
abroad. If taxes have not been paid on this extra-territorial capital, the
holders will be granted time to regularize their position and will only be fined
as per law," said the official. 
     "Those who will not abide to the voluntary disclosure will be automatically
tracked down through the OECD fiscal data exchange framework and they will face
a penal trial. Banking secrecy is coming to an end and from now on we will know
who the Italian tax dodgers are and where their capitals are held,", explains
the Treasury source.
     Italy has been one of the promoters in implementing the OECD Tax
Information Exchange Agreement (TIEA) and has recently signed more than a dozen
new bilateral deals with former tax havens and fiscal jurisdictions including
Switzerland, Liechtenstein and the Principality of Monaco to avoid double
taxation and thus international tax avoidance. Italy has also complied with the
OECD action plan against corporate base erosion and profit sharing. 
     Recovering unpaid taxes and combating the massive black economy in Italy is
a tough job but government has introduced new tools that have contributed in
raising tax revenues in 2016 by an annual 3.3%. 
     Galli noted that additional revenues are more than welcome now ahead of the
budget law approval and announced tax cuts by governments, but that the priority
should be the further stabilization of the public finances. 
     "We have pledged to cut our structural deficit by 0.3% this year and
Brussels is watching us so before we talk about tax incentives for youth labour,
we need to stick to our commitment and this is where extra cash must go," warned
     Italy is moving along the same lines of the Estonian European Presidency
that is attempting to push through international transparency protocols. The
European Parliament is expected to approve a corporate transparency text that
obliges multinational companies operating in the EU to cooperate with tax
     According to the draft, which still needs approval of reluctant member
states, every company with a turnover above E750 million would have to publicly
release detailed information on its business in every country it is active in.
The move follows steps undertaken to crack-down also on web giants' profits at
EU level. Rome has recently fined several internet giants, including Google and
--MNI London Bureau; tel: +44 203-586-2225; email:
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