+1443 776-2705 panelessays@gmail.com

 Hello,

Please read the assignment before bidding. Attached you will find the assignment and the necessary documents to complete the assignment.

Thanks.

Assignment Content

Resources

  • Signature Assignment Grading Guide
  • OECD Database
  • Corporate Finance
  • About Your Signature Assignment
    This signature assignment is designed to align with specific program student learning outcome(s) in your program. Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree. The signature assignments may be graded with an automated rubric that allows the University to collect data that can be aggregated across a location or college/school and used for program improvements. 

    Purpose of Assignment 
    The purpose of this assignment is to allow the student an opportunity to apply their understanding of cash flow management, break-even analysis, and short-term and long-term financing in starting and growing a business. 

    Assignment Steps 
    Prepare a 12- to 15-slide PowerPoint® presentation with speaker notes requesting initial funding of $500,000 to start and run a start-up company. The proposed start-up company could be an existing business model (coffee shop, pet store, etc.), or could be something entirely new and exciting.

    Create the presentation in the following format, with at least one slide to cover each of the following areas: 

  • – Title Page
  • – Table of Contents
  • – Executive Summary
  • – Information about the Industry
  • – Marketing Plan
  • – Competitor Analysis
  • – 3 Year Income Statement (Profit & Loss) Projections
  • – Your assumptions for why and how you will achieve your sales growth and what significant expenses and investments   you expect to incur to achieve your revenue goals
  • – 3 Year Proposed Funding Schedule (sources and uses of the funds received)
  • – Break-Even Analysis
  • – Academic and Business References 

 

Review the following scenarios and assumption, and explain how it impacts your decision to expand:

  • – After Year 3, the investors are interested in your company expanding internationally to possibly outsource labor or to reduce manufacturing costs. What countries would you expand to first, and why? What factors would you need to consider in making this decision?
  • – What is the corporate tax rate in the countries you are considering expanding your business to, and how will that affect your decision to expand globally? (Use OECD Database or another resource to determine the corporate tax rate).
  • – The investors want to see a decision tree detailing the decisions you would make if you received $300K now and $200K at the end of three years instead of $500K up front.
  • – The investors would like your team to provide advantages and disadvantages of using debt financing versus selling company stock to raise capital for growth.
  • – Briefly explain the venture capital process. Does it make sense for your company to raise funds through venture capital? 
    • Format your presentation according to APA guidelines.
      Plagiarism Free
       

Purpose of Assignment 

The purpose of this assignment is for students to synthesize the concepts learned throughout the course, provide students an opportunity to build critical thinking skills, develop businesses and organizations, and solve problems that require data. 

Assignment Steps 

Case 1: 

Scenario: Cloud Data Services (CDS), headquartered in Memphis, provides information technology services, specifically application hosting services in the cloud for several clients in the southern United States. CDS hosts software applications on their network servers. While CDS has achieved great success and customers rate CDS's services highly, lately, some customers have been complaining about downtime on one of the primary network servers. The given dataset, found in the Signature Assignment Excel® Template, contains the downtime data for the month of November.

Use the data analytics skills learned in Week 3 and analyze the downtime data.

Make a short presentation to CDS's management including the following:

1. Using used Microsoft® Excel® Pivot Tables, construct a frequency distribution showing the number of times during the month that the server was down for each downtime cause category.

2. Develop a bar chart that displays the data from the frequency distribution in part 1.

3. Develop a pie chart that breaks down the percentage of total downtime that is attributed to each downtime cause during the month.

4. Evaluate the mean, median, standard deviation, and variance of the downtime minutes for the month of November.

Case 2:

Note: Although you will be studying the concept of CPI in more detail in your ECO/561 class; for the purpose of this case, you need to use the concepts of percentages, percentage increase/decrease, and creating and interpreting line charts to compute the inflation rate in the US economy and determine which time period experienced the highest inflation rate. 

Follow the steps below to complete this signature assignment: 

1. Search for the Federal Reserve Bank of St. Louis (FRED).

2. On the home page of the website, you will see a search box.

3. Type in CPI- AUCSL in the search box and press the return key.

4. The first result of the search will be "Consumer Price Index for All Urban Consumers: All Items." Click on this result link.

5. Click on the Download link and download the data in Excel®.

6. On the Excel® file, the second column gives you the CPI values for each period starting from 1947.

7. Go to the last row and notice the last date and the CPI value. Go back 6 years from this last date. For example, if the last date is 2016-11-01, then the date 6 years ago would be 2010-11-01.

8. Copy and paste this six years data into a separate Excel® tab.

9. Using Excel®, calculate the percentage change in CPI from a year earlier for each observation, beginning with the observation one year later than the first observation. To make this calculation, click on the blank cell next to the observation corresponding to that date and then use Formula 1, located in the Signature Assignment Excel® Formulas document (note that in Excel®, the symbol for multiplication is *), where t-1 is the first observation and t is the observation one year later. For example, to find the percentage change in CPI from 2011-11-01 to 2010-11-01, refer to Formula 2 located in the Signature Assignment Excel® Formulas document. Convert this value to a percentage in Excel®. Repeat this process for the remaining observations (you can use the copy and paste functions to avoid having to retype the formula).

10. This new column contains the national inflation rate.

11. Create a line graph of the percentage changes (inflation rates) from a year earlier.

12. Which period experienced the highest inflation rate? What was the inflation rate during that period?

Format your assignment consistent with APA guidelines. 

,

1

OECD TAX DATABASE

EXPLANATORY ANNEX

PART II TAXATION OF CORPORATE AND CAPITAL

INCOME

(Document updated October 2016)

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

2

Table of contents

II.1. BELGIUM 4 II.1. CANADA 5 II.1. CHILE 5 II.1. FRANCE 5 II.1. GERMANY 6 II.1. GREECE 6 II.1. HUNGARY 9 II.1. ISRAEL 9 II.1. ITALY 10 II.1. LATVIA 16 II.1. LUXEMBOURG 17 II.1. MEXICO 18 II.1. NETHERLANDS 18 II.1. NORWAY 18 II.1. POLAND 19 II.1. SLOVAK REPUBLIC 19 II.1. SLOVENIA 20 II.1. SWITZERLAND 20 II.1. UNITED STATES 20

II.2. BELGIUM 22 II.2. CANADA 24 II.2. CHILE 25 II.2. CZECH REPUBLIC 25 II.2. HUNGARY 26 II.2. ISRAEL 26 II.2. ITALY 27 II.2. LATVIA 27 II.2. MEXICO 27 II.2. NETHERLANDS 28 II.2. NORWAY 28 II.2. PORTUGAL 28 II.2. SLOVAK REPUBLIC 29 II.2. SPAIN 29 II.2. UNITED KINGDOM 30 II.2. UNITED STATES 31

II.3. CANADA 32 II.3. GERMANY 33 II.3. LUXEMBOURG 33 II.3. KOREA 33

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

3

II.3. PORTUGAL 33 II.3. SWITZERLAND 34 II.3. UNITED STATES 34

II.4. AUSTRIA 36 II.4. BELGIUM 36 II.4. CANADA 37 II.4. CHILE 37 II.4. FINLAND 37 II.4 FRANCE 37 II.4. GERMANY 38 II.4. GREECE 39 II.4. HUNGARY 40 II.4. IRELAND 41 II.4. ISRAEL 41 II.4. ITALY 42 II.4. KOREA 43 II.4. LATVIA 43 II.4. MEXICO 43 II.4. NETHERLANDS 43 II.4. NORWAY 43 II.4. PORTUGAL 44 II.4. SLOVAK REPUBLIC 44 II.4. SLOVENIA 44 II.4. SWITZERLAND 44 II.4. UNITED STATES 45

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

4

PART II. TAXATION OF CORPORATE AND CAPITAL INCOME

PART II, TABLE 1 CORPORATE INCOME TAX RATES

II.1. BELGIUM

The effective CIT rate can be substantially reduced by an allowance for corporate equity (ACE). The amount of this allowance is neither related to the behaviour nor to the results of the company, but depends only upon the amount of qualifying corporate equity and the yield on long term government bonds. There is however an upper limit. The original upper limit (of 6.5 % for non-SMEs) was first temporarily reduced to 3.8% in 2010 and 2011 and then permanently lowed to 3% from 2012 onwards. The effectively applied ACE-rates are listed in the table below. Stricter carry forward rules concerning unused ACE-deductible amounts were implemented from 2013 onwards.

Notional interest

rate (ACE- rate)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Non-SMEs 3.442% 3.781% 4.307% 4.473% 3.8% 3.425% 3% 2.742% 2.63% 1.63% 1.131% Small and medium

enterprises (SMEs)

3.942% 4.281% 4.807% 4.973% 4.3% 3.925% 3.5% 3.242% 3.13% 2.13% 1.631%

The lower the return on equity before tax, the lower the effective tax rate due to this allowance for corporate equity. E.g. the effective tax rate is only half the nominal tax rate when the return on equity before tax is twice the notional interest rate. The following table illustrates the impact of the ACE on the effective tax rate when the gross return on equity equals respectively 2, 3 or 4 times the notional interest rate.

non-SMEs 2016 without ACE gROE = 2 ACE- rate

gROE = 3 ACE- rate

gROE = 4 ACE- rate

Gross return on equity (gROE) 2.262 2.262 3.393 4.524

gROE / ACE-rate 2 2 3 4 ACE-rate 2016 0 1.131 1.131 1.131 Tax base 2.262 1.131 2.262 3.393 Nominal CIT rate 33.99% 33.99% 33.99% 33.99% CIT 0.769 0.384 0.769 1.153 Net profit 1.493 1.878 2.624 3.371

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

5

Effective CIT rate 33.990% 16.995% 22.660% 25.493%

II.1. CANADA

The representative sub-central government tax rate is an average of provincial corporate income tax rates, weighted by the provincial distribution of the federal corporate taxable income.

A federal surtax increased the general federal corporate income tax rate by 1.12 % between 1995 and 2007. Budget 2006 eliminated this surtax for all corporations as of January 1, 2008.

II.1. CHILE

Business profits made by individuals or legal entities resident or domiciled in Chile are taxed via the First Category Tax (FCT) levied at a tax rate of 24% in 2016 (in the case of taxpayers adhered to the totally integrated with income attribution tax regime, an income tax rate of 25% will apply from 2017 onwards; for taxpayers adhered to the partially integrated income tax system, a tax rate of 25.5% will apply in 2017 and 27% will apply from 2018 onwards). It applies to profits from any commercial activity whether the enterprise is a legal entity, a branch, a permanent establishment of a foreign company, sole proprietorship or an individual. The tax base is defined as total income less the costs and expenses required to produce it taking into account inflation adjustments. A loss incurred may be carried back and/or forward and deducted against profits without time limit. – It may also be offset against previous retained earnings in a kind of carry-back.

Individuals and legal entities that are not resident or domiciled in Chile are generally taxed on any income derived from Chilean sources at a standard tax rate of 35% (lower rates apply for some types of income and are available under double taxation agreements).

II.1. FRANCE

The rates in Table II.1 include surcharges, but do not include the local business tax (Contribution économique territoriale, which replaced the former local business tax, the Taxe professionnelle from January 1st 2010), the 3 % additional contribution on distributed profits, the temporary surtax applied to

250 million (rate of 5% in 2011 and 2012 and 10,7% onwards) abolished in 2016, and the turnover-based solidarity tax (Contribution de Sociale de Solidarité sur les Sociétés). The Contribution Sociale de Solidarité sur les Sociétés is levied at a rate of 0.16% (0.13% plus a surcharge of 0.03%) of the turnover of companies, excluding VAT and is deductible for income tax purposes.[1]

The standard corporate income tax rate is 33.33%[2]. It is increased by a 3.3% surcharge (Contribution Sociale sur les Bénéfices) for companies with a turnover of at least EUR 7,630,000 on the part of their liable tax payments in excess of EUR 763,000 – resulting in an effective tax rate of 34.43% for companies that have profits above EUR 2,289,000. Since 2011, many reforms have broadened the corporate tax base. The carry-back of losses has been reduced from three to one year and the carry-forward of losses limited to 60 % of the income above EUR 1 million taxable profit, and eventually to 50 % as from 2012. Furthermore, the deduction of net financial expenses has been limited to 85 % of net interest charges for

[1] The French government has recently announced that both the temporary surtax and the turnover-based solidarity tax will be phased out by 2017 [2] The French government has recently announced that the standard corporate income tax rate will be gradually lowered to 28% by 2020, starting in 2017

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

6

2012 and 2013 fiscal years (only when they exceed EUR 3 000 000) and 75 % since 2014. Finally, exemptions on capital gains on sale of affiliates have been reduced.

The Contribution économique territoriale (CET) is composed of two separate taxes, the corporate property contribution (cotisation foncière des entreprises, or CFE) and the contribution for value added (cotisation sur la valeur ajoutée des entreprises, or CVAE). Like the former local business tax (the Taxe professionnelle, abolished in 2010), this tax applies to branches and subsidiaries established in France. The

value added).

The CFE is based on the value of owned or leased office premises. The productive investments are no longer taxed, as it was with the previous local business tax, i.e. equipment and movable property which include machines, tools, movable property and equipment. The CFE is calculated by multiplying the cadastral value of the premises by a certain coefficient, assessed annually by the local authorities. The local authorities also set the minimum contribution payable by the companies in their jurisdiction.

The contribution for value added by businesses (CVAE) is assessed on the value added companies realize during the previous calendar year or the last 12-month financial year if this does not coincide with the calendar year. It applies to firms concerned by the CFE with turnover exceeding EUR 152,500. Only companies with annual pre-tax turnover of over EUR 500,000 must pay the CVAE, but all have to declare the value added created during the fiscal year. The CVAE rate is theoretically 1.5% for companies with an annual pre-tax turnover of over EUR 50 million. Below this amount, companies are subject to a reduced CVAE rate, adjusted according to the level of the company turnover. The assessed value added is itself capped, depending on the case, at 80% or 85% of t is below or above EUR 7,600,000).

II.1. GERMANY

The representative sub-central government corporate income tax rate is for Berlin. In the years between 2000 and 2007 this rate was 0.05 (general rate) * 410 % (local multiplier ( %. As the local business tax was deductible from its own base, the effective rate was 20.5 / 120.5 = 17 %.

This implies that the effective central government corporate income tax rate in 2007 was 26.375 % * (1-0.17) = 21.9 %. The combined corporate income tax rate in 2007 was therefore 38.9 %, as it also was in 2006, 2005, 2004, 2002 and 2001. In 2003, the effective central government corporate income tax rate was 27.96 % * (1-0.17) = 23.2 % due to a temporary increase in the tax rate in order to finance the repair of the damages caused by the major floods in 2002. The combined corporate income tax rate in 2003 was therefore 40.2 %. In 2000, the effective central government corporate income tax rate was 42.2 % * (1- 0.17) = 35 %. The combined corporate income tax rate was therefore 52 %.

With the Corporate Tax Reform in 2008 the representative sub-central government corporate income tax rate was changed to 14.35 % (0.035 general rate * 410 % multiplier ( ). Local business tax is no longer deductible from its own base. The central government corporate income tax rate was reduced to 15 %. The combined corporate income tax rate is now at a level of 30.18 %.

II.1. GREECE

Corporate Taxation

According to the Greek Income Tax Code in force, which was enacted with the Law 4172/2013 and replaced the previous Code (Law 2238/1994), the tax rate imposed on the worldwide income acquired by

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

7

legal persons and legal entities is 26%. This rate applies to income derived during the tax years beginning on or after 1.1.2014. For additional information concerning previous years, see explanatory notes for table II.4.

According to the Law 4334/2015 (Art. 1), the corporate income tax rate was increased to 29%. This rate applies to profits derived during the tax years beginning on or after 1.1.2015.

Legal persons and entities that are subject to CIT include:

a.

b. Private companies that were established in Greece or abroad (partnerships) and keep double- entry books

c. Non-profit legal persons governed by public or private law and established in Greece or abroad, that keep single-entry books, including all types of associations and foundations, except any income derived in pursuit of the fulfillment of their mission, which is not subject to tax,

d. Cooperatives and Associations that keep double-entry books,

e. Civil law societies, civil profit or non-profit companies, joint-stock or silent companies, that keep double-entry books, provided that they are engaged in business activities,

f. Joint ventures that keep double-entry books

g. Legal entities (as defined in Art. 2 of the Income Tax Code) that keep double-entry books and are not included in the previous cases.

Profits from business activity derived by Agricultural Cooperatives and producer groups are subject to a 13% tax rate.

The Law provides certain tax exemptions. For instance, the Greek State, the Bank of Greece, as well as the Holding Companies, the Undertakings for collective investment in transferable securities (UCITS) established in Greece or in another EU or EEA member-state and the Hellenic Republic Asset Development Fund are fully exempt from taxation.. Government bodies are only liable to tax in respect of income from capital and surplus from capital transactions. A special tax regime (tonnage tax) applies for the operation of ships under Greek flag. Additionally, tax exemption applies in any income derived in Greece by foreign legal persons or individuals according to the special provisions of a Double Taxation Convention or a Multilateral International Convention or reciprocity conditions (NATO, UN, diplomatic missions etc.).

Distributed profits are subject to a withholding tax of 10%. In case of a parent-subsidiary relationship, dividend payments and profit distributions paid by subsidiary permanent establishment companies to their parent companies established in another EU Member-State shall be exempt from withholding tax provided that the conditions set forth in Art. 63 ITC are fulfilled (application of the EU Parent-Subsidiary Directive).

Partnerships, joint ventures – other legal entities

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

8

(2000-2012)

TAX RATES FOR LEGAL ENTITIES (except for those subject to corporate income taxation)

Type of legal person 1/1/200031/12/2004 1/1/2005-

31/12/2005 1/1/2006-

31/12/2006 1/1/2007-

31/12/2007 1/1/2008 – 31/12/2009

1/1/2010- 31/12/12

Limited partnership (EE) & Unlimited general partnership (OE), Civil law communities

25% 24% 22% 20% 20% 20%

Joint ventures, Civil companies, , Silent partnerships and Participation companies

35% 32% 29% 25% 25% 25%

Legal services companies of L.518/89, Notary companies of L.284/93

25% 25% 25% 25% 25% 25%

Partnerships under the Greek Law may be either general or limited partnerships. From 2010 to 2012 the above mentioned tax rate of 20% was imposed on the profits relating to partners who were individuals, following the deduction of their entrepreneurial fee, whereas the profits corresponding to legal entities partners were taxed at a 25% rate.

The Law 4110 /2013, as replaced by the Law 4172/2013 brought significant changes to the tax regime of partnerships, civil law societies, silent partnerships, participation companies, joint-ventures, legal services and notary companies, which from 1/1/2013 onwards are taxed with the following tax schedule:

Partnerships, joint ventures and other legal entities keeping single entry accounting books (2013-2016)

Income bracket

Tax rate (%)

Tax bracket Total amount of

50.000 26% 13.000 50.000 13.000

Excess 33%

The tax treatment of the legal entities that keep double-entry books is now aligned with that of corporations (SAs, LLCs and PCCs), which means that the total amount of their net profits is taxable at the level of the entity (taxation at the level of the entrepreneur is abolished), whereas a 10% withholding tax is imposed on distributed profits.

All the above rates are decreased by 40% for income earned from business activities in Greek islands with less than 3.100 inhabitants.

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

9

II.1. HUNGARY

The rates do not include a turnover-based local business tax. Local governments are entitled to levy a local business tax on corporations in their jurisdiction, which is generally levied on the net sales revenue less the revised total sum of the acquisition costs of goods sold and the value of mediated services, subcontractor fees, material costs and costs directly related to R&D activities. The maximum rate is 2 %. Some local governments grant exemptions for small businesses.

The rates do not include the innovation tax as well. This tax is levied on the same basis as the local business tax. The innovation tax rate was 0.2 % in 2004, 0.25 % in 2005, and is 0.3 % from 2006. Small and micro enterprises are exempted from this tax.

As from 2007 credit institutions are obliged to pay 5 % surtax on interest income from loans associated with state subsidies. This tax is excluded from the table.

As from 2009 corporations supplying energy products are obliged to pay a surtax of 8 % on the basis of (adjusted) profit before taxation. As of 1 January 2013 the rate of this surtax is 31%. This tax is excluded from the table.

In 2005 and 2006 credit institutions and financial enterprises were obliged to pay a special tax on their interest income (tax rate was 6 %) or on the profit before corporate income tax (tax rate was 8 %). This tax is excluded from the table.

In the period of 1 September 2006-31 December 2009, taxpayers were obliged to pay a surtax of 4 % on the basis of (adjusted) profit before taxation.

As from September 2010, financial corporations are obliged to pay an extra levy. Different rules have been applicable to institutions engaged in different activities.

A temporary sectoral crisis tax was levied in years 2010-12 the energy, telecommunications and consumer goods retail sectors. The crisis tax was levied on the net sales turnover realized by corporations in the specific taxable sectors.

II.1. ISRAEL

The following table shows the historical tax rates for tax on the combination of wages and salaries and profits that the Financial Institutions pay in lieu of VAT.

Period Tax rate (percent)

1 January 2000 -14 June 2002 17 15 June 2002- 29 February 2004 18 1 March 2004- 30 June 2006 17 1 July 2006- 30 June 2009 15.5 1 July 2009 31 Dec 2009 16.5 1 January 2010 31 Aug 2012 16.0 1 Sept 2012-31 May 2013 17.0 1 June 2013-30 September 2015 18.0 1 October 2015 17.0

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

10

II.1. ITALY

Italian Local Income Tax ILOR

Law no.825 of 1971 introduced local income tax.

This tax was applied:

in the case of individuals wherever resident, on income accrued within the territory of the State, excluding income from employment calculated for personal income tax purposes;

In the case of legal persons, on the overall net income calculated for the purposes of corporate income tax.

Although initially the revenue was allocated to local authorities, starting from 1974 the income was included in the State budget and the tax was no longer considered as local.

The tax was deductible for the purposes of personal income tax, while for the purposes of corporate income tax, it was deductible from 1971 to 1990, partially deductible in 1991 and non-deductible until its abolition in 1998.

This tax was abolished with the introduction of IRAP (Regional Tax on Productive Activities).

The Dual Income Tax (DIT)

The Dual Income Tax (DIT) is a special regime for the taxation of business income introduced with legislative decree n. 446/1997 and aimed at creating incentives for companies to increase self- capitalization thereby boosting economic activities.

With the DIT, the taxable business income is divided into two segments:

The first segment is a hypothetical return calculated by multiplying any qualifying increase in the net equity of the company by a nominal interest rate provided by the State, in excess of the net equity at the end of the taxable year which includes 30th September 1996. This income benefits from a reduced rate for personal income tax or corporate income tax (IRPEG or IRPEF), generally of 19% (7% for newly-listed companies).

The second segment, which is the difference between taxable business income and the amount included in the first segment, is subject to the standard tax rates. Anti-avoidance rules have been introduced in order to prevent the practice of multiplying the basis for calculating the DIT by introducing several times the same new investments. A special anti-avoidance regime has also been provided for in the case of groups of companies.

The Super-DIT

The so-called super-DIT regime, which was introduced with Legislative decree 18 January 2000 no. 9, extends the DIT benefit also to smaller enterprises which wish to be quoted on the Stock Exchange. It provides for even stronger incentives with a reduced tax rate which can be as low as to 7%.

Art. 2, paragraph 1, letter a) of Legislative decree no.9 of 18th January 2000 provides that the qualifying increases in the net equity are multiplied by 1.2 for the taxable period following that which includes 30th September 1999, and by 1.4 for subsequent taxable periods. In each taxable period, however,

Cl ick

to bu

y N OW

! PD

F-XChange

w w

w.tracker-softw are

.c om Cl

ick to

bu y N

OW !

PD F-XChange

w w

w.tracker-softw are

.c om

11

the increases in the equity capital, as adjusted by the above factors, cannot go as far as creating a sort of -end equity capital of

the company which appears in the financial statements.

Moreover, this regime does not apply if the net equity of a quoted company at the end of the tax year preceding the relevant tax year 258,228,450 before taking in account the profits for the tax year.

The DIT incentives qualifying increases in net equity before 30.06.2001 have continued to benefit from DIT incentives until the introduction of the new Corporate Income Tax (IRES).

Substitute tax on income from alienation and contributions of businesses, mergers, de-mergers and exchange of shares.

In 1997 an optional taxation regime of capital gains derived from corporate reorganizations, such as alienation of businesses owned for at least three years, the alienation of qualified or associated participations if the participations were classified as fixed financial assets at least in the last three balance sheets, mergers and de-mergers. Such regime provided for the application of a substitute tax with a 27% rate replacing both corporate and local income taxes. The regime gave the option to pay the tax due in up to five equal annual instalments.

This tax was abolished in 2004.

The regional tax on production activities – IRAP

In Italy the most relevant tax mix change concerned the introduction of the so-called IRAP in 1998, a regional tax on business activities paid by corporations and unincorporated entities which main characteristics is a wide tax base and a relative low tax rate. IRAP represents the basic source of revenue for the National Health System, nevertheless with its introduction other 6 taxes have been abolished, ILOR among others.

IRAP is charged on the value of net production resulting from the business pursued within the region.

The rate of tax is set at 4.25 % for tax payers generally but may be increased by up to one percentage point by individual regions.

The 2008 Budgetary Law has reduced the standard tax rate to 3.9% and in 2009 a deduction, from PIT and CIT, of IRAP concerning interests and labour costs (that is a 10% quota of IRAP paid in the previous year) has been introduced.

Furthermore, a reduced tax rate of 1.90% is charged on taxpayers operating in the agricultural sector and on cooperatives of the fishing sector; various special IRAP regimes apply as well.

Law