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Spain's corporate tax tumbles

Wednesday, October 03, 2012 - 01:42

Oct.03 - The Spanish Government's corporate tax income falls by two-thirds from pre-crisis levels as companies seek profits abroad. Ivor Bennett reports.

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Clothing giant Inditex is one of the few brightspots in Spain's gloomy economy. The owners of Zara saw pretax profits rise by over 10 percent in 2011. But the trouble for Spain is - that money's not being made at home... and the taxes aren't being paid there either. The government's seen its corporate tax takings tumble by almost two thirds from pre-crisis levels. It raised almost 45 billion Euros from corporate tax in 2007 - but that shrunk to just 16.6 billion last year As compensation for the domestic downturn, banks Santander and BBVA are among those seeking profits abroad. HSBC equity strategist Dean Turner says it's a trend not confined to Spain. SOUNDBITE (English) HSBC EQUITY STRATEGIST DEAN TURNER, SAYING: "We see in all the major economies in Europe, Germany, France and even in the US,and the UK, that companies are increasingly seeking out growth markets, which are generally non-domestic." But Spain's struggling for income from smaller businesses too. The crash in the property and construction sectors saw hundreds of firms disappear - leaving not only housing developments empty, but the government's coffers too. Prime Minister Mariano Rajoy did eliminate some corporate tax breaks last year to boost profits. But his 2013 budget unveiled last week is soft on businesses. Any further tax hikes could risk losing precious jobs. And with 1 in 4 Spaniards out of work - that's simply not an option. Ivor Bennett Reuters

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Spain's corporate tax tumbles

Wednesday, October 03, 2012 - 01:42