Windfall tax is currently popular in a large number of countries. The objective of this additional tax is clear. To take some of the profits of energy companies, which are currently benefiting from the current situation, and use them to alleviate the energy crisis.
Windfall tax comes unexpectedly
Only last week, the Italian government approved a new $36.6 billion levy increase on additional profits. Among other things, the law planned to raise the tax on additional profits of companies selling energy from 25% to 35%.
Now, according to a new draft budget law published by Reuters, Italy plans to impose a one-off tax of 50% next year on the extra income booked by energy firms as a result of price rises.
Specifically, this is a 50% tax on the companies’ income in 2022, which is at least 10% higher than the average income in 2018 to 2021. The whole amount also has a maximum, namely 25% of the value of each company’s net assets at the end of 2021. Which is a change from the original version, which calculated the tax base on additional net profits and not on income, like this new proposal.
The windfall tax differs from what the government published as plans to increase the levy on additional profits only last week. So this is bad news for energy companies as they will lose a significant amount of funding. In total, the move is expected to bring approximately $2.66 billion into the government treasury.