Page 68 - economic report 2021

activities and IS are also related to the decision There was notably strong growth in
to reduce advance payments in 2020 from revenue from IRPF, IS and IRNR taxes.
50% to 20% of profits, which increased the
proportion of tax settled in 2021. This change
was made to help protect the cashflow of businesses during the health crisis. Other factors that
pushed up revenue from corporate tax were the reduction in deductions applied by companies and
the Government’s support measures to mitigate the impacts of the health crisis to help the business
network, creating a positive effect on the taxable profits of companies.

Finally, among the direct taxes, the contribution from capital gains tax on property was also
positive (48.1%). This is a tax that is directly related to property transactions carried out within the
country (on the increase in value of real property that appears in transfers). This data highlights
the fact that activity in the property sector is still quite busy in 2021.

Regarding indirect taxes, revenue obtained
GOVERNMENT NON-FINANCIAL REVENUE in 2021 also saw a positive dynamic, with an
Thousands of euros Chart 8.5 increase of 7.9% to €236.2 million, leaving
behind three years of decline. This entry is still
by far the most important source of finance
for the Government, with a percentage of total
non-financial income of 57%, 2.1 points more
than in 2020 when its percentage fell to a
historic low due to the extraordinary situation
of the pandemic.

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Growth in 2021 can be explained by the positive
contribution from the main indirect tax forms,
especially value added tax (IGI), special taxes
and the property transfer tax (ITP), which are in
Direct tax Indirect tax fact among those most impacted in 2020 by the
Other taxes and revenue Investment income
restrictions on economic activity and movement.
Source: Ministry of Finance.
Specifically, the increase in revenue from IGI,
the tax on consumption in force since 2013
The Andorran economy: general developments | VIII. The public sector
Income from indirect taxes also grew and the most important tax form by volume
strongly in 2021 but has st ll not of revenue, was 10.3%, to a net settled figure

regained pre-pandemic levels. of €115.2 million, which is still, however, well
below pre-pandemic levels.

As for consumption tax, a customs duty that is applied to agricultural products imported into
Andorra (import chapters 1-24), with a notable percentage of imports of beverages and tobacco,
the increase was very slight (0.1%), after the steep decline in 2020, leaving revenue at €73.5
million, although it is still the second most important tax form.

In the case of special taxes, the fifth most important tax form by volume of revenue (after
corporate tax and the IRPF), revenue increased 15% to €39.3 million. These taxes are applied to
the importation and manufacture of certain products, such as alcohol, tobacco and hydrocarbons,
so growth in 2021 is linked to the positive trend in imports of these products. Nevertheless,
the amount collected is also lower than in 2019. Within this sphere, note that in July 2021, an
amendment to the Law on special taxes was passed, applying a green tax on hydrocarbons from
1 January 2022. The green tax is a targeted tax form for the purpose of reducing, mitigating and
repairing the effects of CO2 emissions.