The containment of corporate tax avoidance in Italy

In the Italian Tax system, corporate tax avoidance has traditionally been counteracted by means of specific anti-avoidance rules. The Italian legislature has, indeed, traditionally been reluctant towards the enactment of a general anti-avoidance provision - that is, a legal tool whose scope of application, instead of being prevetively and precisely defined, is left to a case-by-case evaluation by Tax Authorities and courts. The purpose of such approach was to prevent legal uncertainty in regard to the tax treatment and consequences of business transactions and contracts. Evidence of such reluctance towards the enactment of a general anti-avoidance clause is found, for example, in the preparatory works of the 1970-1973 tax reform: the position was that a general anti-avoidance clause would have significantly increased legal uncertainty and inequality of treatment among taxpayers, because such a clause would have awarded Tax Authorities and courts unacceptably broad discretion.