Spain's tax take tumbles as companies go abroad
By Tracy Rucinski
MADRID (Reuters) - Spain's corporate tax take has tumbled by almost two thirds from pre-crisis levels as small businesses fail and a growing number of big corporations seek profits abroad to compensate for the prolonged downturn at home.
Attractive tax benefits can accrue to companies expanding overseas, but for Prime Minister Mariano Rajoy's government, which now seems resigned to accepting a European financial rescue, the income flow is reversed.
Rajoy has passed 65 billion euros ($84 billion) of austerity measures including public sector wage cuts and consumer tax hikes but has been reluctant to lean on businesses that are key to maintaining jobs when one in four Spaniards is unemployed.
Despite its domestic woes, Spain is home to globally successful corporations such as banks Santander and BBVA, telephone operator Telefonica, retailer Inditex and oil company Repsol.
Those five generated net profit of 17.8 billion euros in 2011, outstripping the 16.6 billion euros the government raised in corporate tax from a total 1,400 Spanish businesses that year. In 2007, the corporate tax take was 44.8 billion euros.
"Big corporations are paying less and less in taxes. Their profits have not fallen at the same pace that their (Spanish) tax contribution has fallen," said Carlos Cruzado, chairman of Treasury Ministry trade union GESTHA.
That the companies have continued posting profits at all is largely thanks to earnings abroad, but as foreign profits are generally taxed where they are made, Spain's coffers have seen less and less.
Spain receives a smaller proportion of corporate income than personal income, with businesses paying 11.6 percent of total group profits in Spanish taxes compared with 12.4 percent for individuals, according to 2011 data from the Spanish Tax Agency. Continued...