Academics propose lowering corporate income tax by 7.5 pp

Lowering corporate income tax by 7.5% would increase Portugal’s GDP by 1.44% in the short term, according to a study by the Francisco Manuel dos Santos Foundation coordinated by economist Pedro Brinca. One of the main conclusions of the study is the negative impact on productivity and wealth creation due to the fact that Portugal has not followed the trend of most Eurozone and OECD countries in reducing the tax burden on companies in recent years. The standard corporate income tax rate in Portugal is 21%, but companies are also subject to the municipal surcharge (revenue for local councils) and the State surcharge that was introduced during the troika years. According to OECD calculations, the effective corporate tax rate in Portugal is 27.5%, one of the highest rates in Europe.