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Italy plans to expand tax amnesty to companies

Italian finance minister Giulio Tremonti launched the amnesty as part of his efforts to control Italy's budget deficit.

Swiss banks are facing a fresh exodus of cash, with the Italian government considering an extention of its tax amnesty from individuals to companies.

The Italian government is eager to encourage the repatriation of funds kept hidden in Swiss accounts to avoid tax.

Italy introduced a tax amnesty for individuals in November 2001 in an effort to repatriate some SFr100 billion ($69 billion) in private funds deposited in Switzerland.

According to the Zurich-based “Neue Zürcher Zeitung”, since then around SFr88 billion has returned to Italy, more than half of it from banks in canton Ticino.

The NZZ said the new “super-amnesty” would target funds funnelled out of Italy through offshore firms, and into Swiss accounts.

Accounting fraud not punished

Italy is also prepared to turn a blind-eye to money shifted abroad through illegal accounting methods.

In return, companies would be expected to pay a flat 20 per cent levy on the repatriated funds.

Under the terms of the amnesty on individual funds, Italians repatriating funds benefited from partial immunity from tax-evasion legislation. Penalties were limited to a tax of 2.5 per cent levied on the gross amount deposited into an account.

The Italian government’s decision to introduce an amnesty has triggered a debate about the wisdom of allowing tax avoiders to escape full punishment.

On Wednesday, Vito Tanzi, an official responsible for taxation in the Italian economics ministry, said he was opposed to tax amnesties, although there were times when such a measure was needed.

Swiss banks have reacted to the amnesty by opening more branches in Italy in an effort to re-capture most of the repatriated money.

swissinfo and agencies

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR

SWI - a branch of Swiss Broadcasting Corporation SRG SSR