Government approves corporate tax reduction
The measure is part of the "Accelerate the Economy" program approved on Thursday.
On Thursday, the Government approved an economic measures package, titled the plan to “Accelerate the Economy”, including a gradual reduction of the IRC and the creation of the so-called VAT group regime.
“We face the future of the economy with confidence”, said Prime Minister Luís Montenegro when presenting this package.
Under the new plan, the corporate tax rate (“Imposto sobre o Rendimento das Pessoas Coletivas, or IRC”) will undergo a gradual reduction of two percentage points per year, up to 15% in 2027. This measure was part of the Government’s electoral platform.
This reduction aims to boost economic growth and investment and the investment capacity of companies, with the Government also justifying it as a way of improving salaries.
Another of the approved measures is the creation of a regime that allows intra-group compensation of VAT balances, starting in January 2025.
This concept of VAT groups aims to improve companies’ treasury by reducing VAT refund processes and streamlining procedures through the consolidation of tax balances to be delivered to the State and tax to be refunded by the State.
The “State to pay in 30 days” plan is another of the planned measures, with the aim of having “more capitalized companies”.
New minimum taxation mechanism
The executive also announced that it will move forward with a minimum taxation mechanism of 15% for multinational and national groups.
This is the transposition of a European Union directive on a minimum level of taxation on the profits of multinational companies and large national groups.
The Minister of Finance, Joaquim Miranda Sarmento, recalled that Portugal was, in fact, late in complying with the transposition of the directive, and the European Commission even opened an infringement case.
At issue is the community law that came into force on January 1 to introduce a minimum effective tax rate of 15% for large companies active in EU member states, covering multinationals and large national groups with higher combined financial income. to 750 million euros per year.
The EU directive followed the global agreement reached by the G20 and the OECD and aims to create "greater equity and stability in the tax landscape in the EU and globally by limiting the race to the bottom of corporate tax rates and reducing the incentive to that companies transfer profits to low-tax jurisdictions", as signaled by the European Commission upon approval.
Strengthening tourism support lines
The executive also approved the review and reinforcement of support lines for Tourism, such as Linha + Interior Turismo, which aims to support the sustainable tourist development of territories, with an allocation of 10 million euros.
A credit line is also planned with an allocation of 50 million euros, counter-guarantee, with a maximum amount per operation of 750 thousand euros, within the scope of the Empresas Turismo 360º Program, to encourage companies in the sector to adopt an ESG agenda ( Environmental, Social and Corporate Governance) and analyze the impacts of their activity on the environment and social systems in which they operate.
Still in the tourism sector, the launch of the Tourism + Nearby and Proximity Commerce Program was approved, with the creation of a credit line with an allocation of 10 million euros, to support projects of a public or private nature, "that demonstrate generating a close and positive impact on local communities and that have the ability to demonstrate the potential of tourism as a factor of inclusion and social cohesion".
The reinforcement and expansion of the Offer Qualification Support Line was also approved, which consists of a medium and long-term line of credit (with completion bonus), resulting from a partnership between Turismo de Portugal and the banking system, of support for companies in the Tourism sector, which has an allocation of 300 million euros, with a maximum amount per operation of around three million euros.
The program to accelerate the economy also includes investment in tourism training, with the creation of an international level training campus and a program of strategic partnerships for Hospitality and Tourism Schools in the context of the Community of Portuguese Speaking Countries (CPLP ).