Italy's Budget Law for 2008 contains significant changes with regard to corporate income tax. This article analyses the main reforms with regard to the corporate income tax and regional tax rates: the participation exemption rules; statutory withholding tax on outbound dividends within the European Union; the tax basis in tax-free reorganizations; thin capitalization rules and a new limitation on the deduction of interest; benefits under the tax consolidation regime; and deferral of certain deductions and increase of the tax base.