ROME: Italy has the world’s most complex tax system, according to the first annual Financial Complexity Index compiled by TMF in a ranking of 94 jurisdictions worldwide.
“Despite measures to reduce taxation and align Italian accounting measures with international rules, the country still has some very specific requirements that contribute to its tax ranking,” said TMF Group’s EMA head Juraj Gerzeni.
Overall, Turkey is the world’s most difficult country for accounting and tax compliance, followed by Brazil. Italy and Greece are in third and fourth place. Vietnam is in fifth place. The least complex was the Cayman Islands.
South and Central America have five jurisdictions in the top 15 most complex: Brazil (2), Colombia (6), Argentina (9), Bolivia (12) and Mexico (1%)
The Italian Revenue Agency has taken steps in recent years to simplify the tax system, introducing a cooperative compliance program that helps companies obtain opinions on their tax treatment ahead of making investments.
But much work remains to be done, according to the TMF survey.
“Considerable time is spent dealing with the tax system,” the TMF said in a statement. The full study will be released later on Monday.
One of the chief problems with Italy is that taxation is levied at national, regional and municipal levels, and taxpayers have to pay a high number of individual taxes.
Paradoxically, a new layer of red tape has been created to deal with Italy’s endemic VAT evasion, with electronic invoicing is now mandatory in some cases.
“For example, sales invoices issues to Public Authorities must be uploaded to specific portals,” the study said. “In the case of electronic storage of invoices, an electronic signature and stamp is required.”
The study acknowledged that Italian tax rules are becoming “fairer and more aligned” to international standards, with more flexibility introduced regarding taxation of international companies.
