FINANCE: Concerns grow due to lack of legal certainty surrounding economic policies

THREE of the largest companies in Spain have said they are concerned over what they said was a lack of legal certainty surrounded economic policies the government has proposed.

Electricity provider Iberdrola, the BBVA bank and telecommunications firm Telefonica said planned tax hikes on investments and the increase of the minimum wage to €900 were causes for concern.

It comes after government ministers announced a range of policies which also include new levies on digital companies and currency exchanges.

Begoña Garcia-Rodriguez, head of Iberdrola’s fiscal department, said analysts and investors were already asking about the impact of the plans.

Plans to tax earnings from dividends that came from companies abroad were “bad news”, Garcia-Rodriguez said.

Jose Maria Vallejo, the head of global tax at BBVA, said new levies and tax hikes would cause Gross Domestic Product (GDP) to fall and financing costs to rise. The planned rates would also hit company balance sheets, Vallejo added.

Iñigo Fernandez de Mesa, head of the economic committee of the Spanish Confederation of Business Organisations (CEOE), said: “Right now, companies and individuals do not know what they have to pay and they are not investing.”

Silvia Ropas Ribas, deputy head of the government’s Directorate General of Taxes (DGT), said ministers would continue looking at how new rates would be applied before they are enforced.

The government’s tax plans come as part of its 2019 budget which Finance Minister Maria Jesus Montero formally presented to parliament earlier this month. Taxes have been raised to help fund planned increases in government spending.