The Ires tax base is broadened mainly by setting a new limit to the deductibility of interest expenses and abolishing accelerated depreciation. There will be redistributive effects among firms, generally to the benefit of the less heavily indebted. Also, a more favourable treatment for corporate reorganizations is reinstituted. To broaden the corporate income tax base, the treatment of consolidated reporting is also revised.
The portion of capital gains enjoying the participation exemption is raised to 95 per cent, as for dividends; this measure tends to shrink the tax base. Consistently with the new treatment of interest expense, the rules on thin capitalization and the pro rata capital tax are abolished, simplifying the system.