On the basis of existing legislation Italian regions and local authorities have been entitled to receive payment of the a 50% withholding tax that could have been applicable to their notes. In the absence of specific regulatory provisions and failing any express provision in the budget laws of the Republic of Italy, this legislation had never been applied. This has created some confusion and uncertainty about the accounting treatment of such claims at territorial level.
Circular No. 23/2002 of the Ministry of Interiors of October 31 2002 clarifies the situation. According to the circular, regions and local authorities are entitled to receive an amount equal to 6.25% of the interest payable by the relevant issuer, irrespective of exemptions from withholding tax applicable to the relevant noteholder. Regions and local authorities will now have to communicate to the Ministry of Interiors by November 30 2002 a detailed list of the interest each of them have paid in the period 1996-2001. This communication must be followed by annual communications pertaining to each subsequent year and to be filed by March 31 of each year.