The fiscal view in Portugal is, without a doubt, a critical issue. In this context, IRC is one of the most important taxes in this area.
Since 1989, the data came into force, the IRC has been subject to multiple and successive changes, and the last major changes occurred in the 2014 Tax reform process.
However, and as societies and economies constantly evolve, is there still room for this to change the IRC? Certainly yes, and so I leave here 2 (two) possible suggestions that can serve for a deeper reflection.
A first reflection would be to review the regime that regulates the deduction of tax losses, provided for in article 52 of the IRC Code. Despite the latest changes over the past few years, it is still unclear what the thread of these changes is.
Therefore, a “regime pact” would be necessary in order to maintain a stabilized tax loss deduction regime, in line with best international practices.
In fact, with the 2014 Corporate Income Tax Reform process, the reporting period for deducting past tax losses will be 12 years. However, this was only in effect until 2016, and from 2017, this period was reduced to 5 years. These changes do not promote Portugal’s fiscal promotion.
Thus, and taking Spain as an example (often compared to Portugal), an alteration could be contemplated that would not impose any temporal or quantitative limit (the current rule limits the deduction to 70% of the taxable income registered in the year ) to carry out this deduction. This principle is based on a generally accepted technical premise that at the level of IRC there is a principle of solidarity between fiscal years.
Another area of intervention would be to review the current autonomous taxation regime. In fact, the autonomous corporate tax regime is an innovation in Portuguese legislation that does not find parallels, namely at the level of the European Union.
It is something that has even been deserving of some controversy, as it is a form of taxation that focuses on expenses and not on profits.
Considering the existence of the autonomous taxation system as inevitable, it could be considered a greater flexibility in the application of the currently existing rules.
First, the penalty in situations where taxpayers record tax losses. What this situation seems to show is that the legislator understands that if a company determines a tax loss, it will have to pay an aggravated tax in the context of autonomous taxation (that is, an increase of 10 percentage points), since it is assumed that it can result from some manipulation by the taxpayer and not a business situation. Such an incorrect assumption in most cases. Hypotheses of tax fraud and tax evasion are one thing, such as which must be fought in-house and still subject to rigorous inspection, another thing is to penalize an already economically weak situation.
Another aspect to be taken into account is the use of the autonomous taxation regime as a way to promote better sustainability policies, namely through the use of vehicles powered exclusively by electricity and also plug-in hybrid vehicles. If, on the one hand, the lack of autonomous taxation in the case of charges for electric vehicles is welcomed, on the other hand, the existence of autonomous taxation (albeit at lower rates) on plug-in hybrid vehicles could be revised in order to further reduce this type of tax incidence.
Therefore, an ambition must be greater in order to reduce the applicable costs. For example, reduce by 50% the costs currently applicable to this type of vehicle.
In short, and even though much more could be commented on in this area, the idea is clearly that political decision makers, willing to, can in fact contribute to increasing the level of fiscal analysis in Portugal.
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