Facing a hefty fine from the EU, Spain is considering a hike in corporate tax.
Both Spain and Portugal were deemed guilty of failing to bring their government deficits into line and a sanctions procedure has begun against the two nations.
Both countries have 10 days to convince the EU not to levy financial penalties.
The European Commission, the EU's executive arm, will consider their arguments and must decide on sanctions within 20 days.
Spain’s acting Economy Minister told a press conference in Brussels that “we are going to propose a measure” designed to raise €6 billion in a bid to stave off a fine.
The existing corporate tax rate in Spain is 25% with effect from the beginning of 2016. This is down from 30% in 2014.
The increase can only be confirmed if caretaker Prime Minister Mariano Rajoy gets a parliamentary majority to take office again.
The Commission is empowered to demand fines of up to 0.2% of GDP if countries repeatedly overreach deficit limits – this could reach nearly €2.2 billion for Spain.
Spain has missed its targets for four consecutive years. Last year, the deficit was 5.1% of GDP against a target of 4.2% as set by the Commission. The official EU limit is 3% of GDP.
But the Commission could also reduce the penalties to nil.
Although there have been a number of countries with persistent budget breaches, the Commission has never issued a fine.
The Spanish economy minister said it would be “a huge paradox” to fine the country now in light of the economic turnaround which resulted in 3.2% growth last year.
