Italy to charge energy firms with 50 percent windfall tax

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Italy to charge energy firms with 50 percent windfall tax

ROME, Italy: A draft of the government's budget for the year 2023 shows that Italy plans to charge energy companies that have benefited from the surge in oil and gas prices with a 50 percent one-off windfall tax on profits next year.

The levy has a rate equal to 50 percent of their 2022 corporate income, which is 10 percent higher than the average income reported between 2018 and 2021. It has a ceiling of 25 percent of the value of net assets at the end of 2021.

After the release, shares in ENI and Enel fell 2 percent and 1.7 percent, but were well below Italy's blue chip index, but broadly in line with Europe's STOXX index for the energy sector, which fell 1.7 percent.

Rome expects to raise $2.66 billion from the tax, which replaces a similar levy in force this year that caused criticism and refusals to pay from multiple firms, and follows a framework proposed by the European Commission.

The energy companies have until November 30 to make the final payment on the current windfall tax, which has a 25 percent rate and is calculated on the value of operations subject to the VAT sales tax.

Total revenues are expected to be worth around $5 billion, which is less than half of the initial estimate of the Treasury, based on the 40 percent down payment made by the end of August.