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Fiscal year 2018

3. Corporate Tax

In 2018 tax revenues from the Corporate Tax grew to 24,838 million, 7.3% more than what was collected in 2017. Fractional payments, which are the main component of the tax, grew by 11.7% (especially in consolidated groups) due to the good performance of profits and the greater weight of the minimum payment within said payments. The growth of the tax was slowed by the increase in refunds, both those from the annual declaration of the campaigns settled in the year, and those from control actions.

It is estimated that the consolidated corporate tax base grew by 12.8% in 2018, an increase practically the same as that expected for profits (12.9%). In both cases, the 2017 records are exceeded (7.3% and 9.9%, respectively) (Table 3.1). The forecast is made based on the fractional payments declared by Large Companies and tax groups that are the taxpayers obliged to make payments on account for the benefits obtained throughout the year. From the analysis of these payments (Table 3.2), it is concluded that the improvement observed in them was concentrated in a few consolidated groups, while in the rest of the companies the benefits moderated as the year progressed.

As noted in last year's report, in these years the process of recovering profits after the crisis that began in 2008 was being completed, also with a very different composition of that profit (with more real and less financial part) of which was observed in the years 2006 and 2007 (Table 8.4). With the information available, in 2017 the maximum level of benefits that had been achieved in 2007 would have already been reached, and in 2018 it would have been exceeded. This, as was also pointed out then, did not mean that the tax base and the tax were recovered with the same intensity, as can be seen in Tables 3.1 and 8.5 and shown in Graph 3.1.

It is estimated that the effective rate of Corporate Tax increased by 2% in 2018 (Table 3.1). There were no regulatory changes, so the variation is due to composition effects (the bases of companies with a higher effective rate grow more).

Corporate Tax accrued is expected to grow by 15.1% in 2018 (11.1% without the differential fee that will be presented in July; Table 3.1). Of the additional 3,200 million represented by this growth, close to 80% corresponds to installment payments and the rest comes from the lower negative differential quota and the increase in withholdings of movable capital.

The main component of the tax is installment payments, which grew by 11.9% in 2018. The behavior of these payments was very different in the different groups of taxpayers (Table 3.2). In Large Companies and consolidated groups, which are taxed according to their profits, the increase in payments reached 13.5% (18.3% in groups and 5.4% in companies not belonging to groups), very much above what was achieved in 2017. The improvement occurred in a very concentrated way in the groups (Graph 3.2) and, in particular, in a small number of them; In the rest of the companies, the growth in 2018 was lower than that of 2017. It is also worth highlighting the increase in the minimum payment contribution. For their part, payments in SMEs (which are taxed according to the last annual installment presented) grew by 2.3%, which represented a strong contraction compared to the growth of the previous three years.

As has been pointed out in recent years, the fact that the fractional payment in large companies and groups has a minimum payment based on the accounting result has implications for the way in which the tax is entered (more fractional payments and negative differential tax). ; Chart 3.3) and in the amount of refund requests (the greater the contribution of that payment, the greater the refund requests tend to be; Graph 3.4). And all of this affects the adjustment between accrual and cash (payments are entered in the year of accrual, but refunds are requested the following year and are paid between that year and the following year), an adjustment that, in aggregate for the entire tax, It appears in the penultimate block of Graph 3.5.

tax revenues grew by 7.3% (Table 3.1). Such a large difference with the growth of the tax accrued is explained, apart from the usual conceptual differences, by the advancement of the rate of realization of refunds that occurred in 2018 compared to the previous year. If this element is corrected, income growth would be 12.8%, a figure closer to accrual.

From this and the analysis of the accrued tax, it can be deduced that the two elements that determined the trajectory of the tax in 2018 were the high growth in installment payments (11.7%; Table 3.2) and returns (14.1%; Table 7.2), the first mainly linked to the behavior of profits in 2018 and the second linked to the declarations and settlements of previous years. Regarding the latter, there are three reasons that explain such high growth in 2018: the sharp increase in the returns requested from the 2016 campaign, most of which were made in the first months of 2018 (Table 3.3); the advance in the rate of realization of the returns corresponding to the 2017 financial year (requested as of July 2018 and whose amount was approximately the same as in the previous year) (Table 3.3); and the increase in returns derived from settlements carried out by the Administration (Table 7.2).