A Corporate Income Tax Microsimulation Model for Italy

The CITSIM-DF is the corporate tax microsimulation model developed by the Department of Finance in order to estimate the heterogeneous impact of changes in fiscal regulation on average effective tax rates, both in terms of financial and distributional effects. One of the main innovations of the model is the inclusion of forecasts on future economic trends into the simulations, by projecting forward the main fiscal and financial variables. Currently projections are based, at macro level, on national accounts and official projections reflected in the documents of economy and finance. In the next future, the model will be further developed in a now-casting perspective, incorporating in the projections, at micro level, the most recent administrative data available. The model proposes also a new methodology for disentangling investments and historical cost broken by type of asset (buildings, machinery and equipment). CITSIM-DF is based on a unique dataset that integrates administrative data derived from tax returns and financial statements for corporations.