Portugal’s Confederation of Commerce and Services (CCP) has called on the government to go further in its plans to cut company taxes, proposing a 15% corporate income tax rate for the first €100,000 of profits earned by small and medium-sized enterprises (SMEs).
The suggestion is part of a series of proposals sent to the government as part of the State Budget for 2026 (OE2026), especially regarding taxation, which were hand-delivered today by the president of the CCP, João Vieira Lopes.
The meeting was attended by the minister of labour and the minister of finance to discuss the general outlines of the budget proposal, which will be submitted to parliament on October 10.
The government has already suggested lowering the rate on the first €50,000 of taxable income from 16% to 15% starting in 2026. However, Vieira Lopes argued the threshold should be doubled to give SMEs more breathing space. According to CCP’s proposal, once profits exceeded the first €100,000, companies would start being taxed at the normal rate.
The confederation also wants the government to propose an amendment to the Corporate Income Tax Code to lower the autonomous taxes paid by companies on car expenses.
CCP notes that last year, although the tax brackets were updated, the reduction in rates was “only 0.5 percentage points”, and is now proposing an additional reduction. For vehicles costing less than €37,500, it proposes lowering the rate from 8.5% to 7.2%, a reduction of 0.8 percentage points. For cars purchased between €37,500 and €45,000, it proposes a reduction from 25% to 22.5%, a decrease of 2.5 points. For vehicles with a purchase value of €45,000 or more, it proposes a reduction from 32% to 28.8%, down 3.2 points.
Regarding plug-in hybrid passenger cars, it argues that they should fall within each bracket to 2.25%, 6.75%, and 13.5%.
On the other hand, the confederation led by João Vieira Lopes also proposes that, when companies are called upon by the Tax and Customs Authority (AT) to prove the VAT refund, the suspension of the refund should have a time limit. In cases where there is a need to prove the refund and the rules for suspending the inspection procedure period (designed to verify compliance with tax obligations a posteriori) apply, the refund is suspended indefinitely.
“As inspection procedures can legally last a year and then be suspended for a further 12 months, the taxpayer could be left without a refund for at least 24 months and, if he is an exporter, he could be relegated to insolvency, and the subsequent payment of compensatory interest does not reverse the situation to which he has been ‘condemned’ by the lack of an inspection decision,” explains CCP.
To avoid this, the confederation proposes that the VAT Code should set a maximum limit of six months for the tax authorities to assess the legitimacy of the amount to be reimbursed, counting “from the submission of the periodic declaration”.
Concerning the incentive scheme for the capitalisation of companies, CCP argues that the scheme has a wording that is apparently contradictory to the purpose it is intended to achieve” and therefore proposes “converting it into a deduction from taxable income without it being dependent on the ‘decapitalisation’ of the company or the sale of the stake”.
Another pitched measure includes revising the IMI property tax surcharge so that it only applies to assets valued above €1.2 million, instead of the current €600,000 threshold.
Source: LUSA
