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In Romania the corporate income tax rate and the personal income tax rates for 2013 are 16%. In comparison in Italy the tax rate for an individual is between 23%-43%. In addition to direct taxation (IRPEF), there is also a regional tax of 1.2%-2.03% and a municipal tax of 0.1%-0.8%. There are reduced rates of tax and tax exemptions available to certain income earners. The standard rate of Italy corporate tax (IRES) in 2013 is 27.5%%. In addition, local tax (IRAP) is imposed at a rate of generally 3.9%, bringing the effective tax rate to 31.4%. 1.2.1 Profit tax Tax profit or taxable profit is used to distinguish between accounting profit or earnings (the number that is generally referred to in financial results for public companies and quoted in the press). Taxable profit is the number that is used to calculate tax on income. For a number of reasons, taxable profit may differ from reported earnings, and may be higher or lower. Company financial reports often distinguish between profit before tax and after-tax profit. 1.2.2 Income tax An income tax is a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer. Details vary widely by jurisdiction. Many jurisdictions refer to income tax on business entities as companies tax or corporation tax. Partnerships generally are not taxed; rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions thereof. Most jurisdictions exempt locally organized charitable organizations from tax. Income tax generally is computed as the product of a tax rate times taxable income. The tax rate may increase as taxable income increases (referred to as graduated rates). Tax rates may vary by type or characteristics of the taxpayer. Capital gains may be taxed
at different rates than other income. Credits of various sorts may be allowed that reduce tax. Some jurisdictions impose the higher of an income tax or a tax on an alternative base or measure of income. 1.2.3 Dividend tax A dividend tax is an income tax on dividend payments to the stockholders (shareholders) of a company. Dividends can be taxed either as ordinary income at ordinary income tax rates or at the preferred long-term capital gains tax rate. Dividends are classified either as ordinary dividends or as qualified dividends. All dividends are ordinary dividends. Some dividends are qualified dividends and qualify for the preferred tax rate of 0% or 15%. 1.2.4 Local tax A tax assessed and levied by a local authority such as a county or municipality. A local tax is usually collected in the form of property taxes, and is used to fund a wide range of civic services from garbage collection to sewer maintenance. The amount of local taxes may vary widely from one jurisdiction to the next. Unlike federal or state taxes, the benefits arising from local taxes are generally apparent at the community level. Municipalities have to face a constant balancing act with regards to levying local taxes, since rising taxes may lead to "taxpayer revolt," while low taxation levels may lead to a cutback of essential services.