Today's Coming Crisis Movie

Friday, October 5, 2012

Spain's tax take tumbles as companies go abroad

(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. Read More