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Portuguese Secretary of State for Tax Affairs outlines how tax reforms contributed to Portugal’s economic recovery

Portuguese Secretary of State for Tax Affairs outlines how tax reforms contributed to Portugal’s economic recovery
Global
28 May 2015

Today at the Taxand Global Conference in Milan, Paulo Núncio, Secretary of State for Tax Affairs of Portugal, delivered a keynote address in which he described how fiscal reforms in four key areas, being tax administration, invoicing and reporting, and corporate and personal income tax, contributed significantly to Portugal’s emergence from its worst recession in more than 40 years.

Today at the Taxand annual Global Conference in Milan, Paulo Núncio, Secretary of State for Tax Affairs of Portugal, delivered a keynote address in which he described how fiscal reforms in four key areas, being tax administration, invoicing and reporting, and corporate and personal income tax, contributed significantly to Portugal’s emergence from its worst recession in more than 40 years.

Secretary of State Núncio described how in 2014 Portugal collected more than €42 billion in tax revenue, exceeding targets by approximately €1.3 billion, and indicated that the improvements in tax collection efficiency have had a significant stabilizing effect on the Portuguese economy.  These improvements are attributable to a number of steps taken by the Portuguese government to curb tax evasion and improve compliance through measures such as a novel consumer e-invoicing system.  Portugal has also established the large taxpayers’ forum intended to improve the relationship between taxpayers and the Portuguese tax administration.  The motivations behind the forum include the desire to increase certainty for large taxpayers through tax rulings and to reduce compliance burdens and therefore costs for both taxpayers and the tax authority.  However, the forum is also intended to compel companies to avoid aggressive tax planning schemes and the use of tax havens and to cooperate with tax authorities to resolve fraud cases.

Corporate tax reforms have been focused on broadening the tax base in order to allow for lower corporate tax rates.  The combination of base broadening and improved compliance allowed for corporate tax rate reductions from 25 percent to 23 percent in 2014, which is to be followed by a further reduction to 21 percent in 2015. Secretary of State Núncio indicated that the goal is to bring the rate to 17 in the medium term.


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Taxand's Take

Secretary of State Núncio stated that "the corporate tax rate should be within the group of the most competitive rates in the European Union and getting close to countries with which Portugal competes in attracting foreign investment, mainly Poland and the Czech Republic."

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