Global Tax 50 2014: Mariano Rajoy

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Global Tax 50 2014: Mariano Rajoy

Spanish prime minister

Mariano Rajoy

Mariano Rajoy is a new entry this year

With Spain's overall debt load approaching 100% of GDP this year, Prime Minister Mariano Rajoy needed to act. And that he did. In May the bearded Spaniard pledged to cut taxes in an attempt to stimulate the national economy. "The general idea is that taxes have to come down," he says. "The goal is to leave more disposable income in the hands of families, improve the competitiveness of the economy, raise savings and above all else to boost employment."

The Rajoy-led government then presented a tax reform package on June 20 which practitioners have described as "seeking to overhaul the main taxes in Spain". In line with Rajoy's earlier comments, the three core aims of the reform effort are outlined as: boost job creation by lowering taxes; improving the competitiveness of companies by giving them incentives to increase their own resources; and improving tax fairness.

A report commissioned by Rajoy, which ultimately led to the reform package, concluded "the tax base is too narrow and over-reliant on labour taxes, which are among the most detrimental to activity".

The reform plans were endorsed by the Spanish Congress on November 20 and the legislation will enter into force from January 1 2015.

Under the plans, the country's corporate tax rate will drop from 30% to 28% next year, with a further reduction to 25% in 2016, while a reduced rate of 15% will apply for a period of two years for companies formed in 2013 or 2014.

The package will also unify the treatment of dividends and gains on holdings in Spanish resident and non-resident entities, by generalising the exemption regime, and alter the requirements to apply the participation exemption, which will lead to a review of Spanish investment structures in foreign entities.

While there will be a removal of certain tax credits as a way of broadening the tax base, the research and development credit will be improved.

The OECD praised the Rajoy government for continuing to prioritise updating the Spanish tax code.

"The courageous reforms enacted over the past two years are paying off," according to OECD Secretary-General Angel Gurria. "It is now crucial to build on these accomplishments with new efforts to enhance growth, boost productivity, further improve competitiveness and get people back to work."

However, while the OECD also praises the incentivisation of R&D spending, it notes that "the credit, while apparently generous, is not widely used" and recommends Spanish authorities speed up the process of certification for tax credit eligibility.

Specifically on the indirect tax front, the Rajoy government in November announced it will introduce a new real-time VAT reporting system from January 1 2017.

Taxpayers have largely reacted positively to the package.

"I understand this [corporate tax cut to 25%] is sufficient to improve the business tax environment and attract investment," says Maribel Mendez, Spanish group tax manager at BMW. "Good news is that the use of loss carry-forwards will be limited to 60% of the taxable income rather than the current temporary limit of 25% and financial goodwill amortisation will be back to 5% in 2016."

The Global Tax 50 2014

View the full list and introduction

Gold tier (ranked in order of influence)

1. Jean-Claude Juncker  2. Pascal Saint-Amans  3. Donato Raponi  4. ICIJ  5. Jacob Lew  6. George Osborne  7. Jun Wang  8. Inverting pharmaceuticals  9. Rished Bade  10. Will Morris


Silver tier (in alphabetic order)

Joaquín AlmuniaAppleJustice Patrick BoyleCTPAJoe HockeyIMFArun JaitleyMarius KohlTizhong LiaoKosie LouwPierre MoscoviciMichael NoonanWolfgang SchäubleAlgirdas ŠemetaRobert Stack


Bronze tier (in alphabetic order)

Shinzo AbeAlberto ArenasPiet BattiauMonica BhatiaBitcoinBonoWarren BuffettECJ TranslatorsEurodadHungarian protestorsIndian Special Investigation Team (SIT)Chris JordanArmando Lara YaffarMcKessonPatrick OdierOECD printing facilitiesPier Carlo PadoanMariano RajoyNajib RazakAlex SalmondSkandiaTax Justice NetworkEdward TroupMargrethe VestagerHeinz Zourek

more across site & shared bottom lb ros

More from across our site

Effective audit management requires more than documentation; it’s the way taxpayers engage that can shape audit direction, manage procedural ambiguity, and preserve options for appeal or litigation
American advisers are falling short of client expectations when it comes to providing value-added services, but remaining tight-lipped won’t make the problem go away
Awards
The Social Impact Awards unveil new categories to reflect a changing legal and social landscape
Australia's approach to tax policy has undergone significant shifts in recent years, reflecting global trends and unique domestic considerations. These developments merit close attention from tax professionals
The UK has temporarily dodged the 50% rate due to a trade deal signed with the US in May; in other news, Ryan acquired a Northern Irish tax firm
Following a $28 million funding round, Aibidia wants to ‘double down’ on the US market via partnerships with the ‘big four’, the Finnish TP tech provider’s CEO tells ITR
The Luxembourg-based TP leader tells ITR about relishing the intellectual challenge of his practice, his admiration for Stephen Hawking, and what makes tax cool
The case to determine whether the tariff regime is constitutional will eventually find its way to the US Supreme Court, ITR has also heard
In other news, the Council of the EU pledged support to a CBAM simplification and exemption initiative, and Portugal issued new VAT filing guidance
While Brazil’s sweeping tax updates are a triumph for modernisation, Giuliano Gioia of Sovos warns that MNEs with a Brazilian footprint should be prepared for a short and sharp adjustment
Gift this article