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Addressing the Debt Bias: A Comparison between the Belgian and the Italian ACE Systems

Author

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  • Ernesto Zangari

    (European Commission)

Abstract

This paper reviews the experiences of Belgium and Italy with ACE-type systems of corporate taxation. The comparison focusses on the definition of the base for the computation of the allowance and the anti-avoidance framework to tackle abuses. It is argued that the Italian system, with its incremental feature and a comprehensive anti-avoidance framework targeting transactions between related parties, seems a more viable solution for an ACE reform aimed at addressing the debt bias in the corporate sector.

Suggested Citation

  • Ernesto Zangari, 2014. "Addressing the Debt Bias: A Comparison between the Belgian and the Italian ACE Systems," Taxation Papers 44, Directorate General Taxation and Customs Union, European Commission.
    • Handle: RePEc:tax:taxpap:0044
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    File URL: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_44.pdf
    File Function: final version, 2014
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    More about this item

    Keywords

    Allowance for Corporate Equity; Capital structure; Taxation; Italy; Belgium;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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