2024 – The impact of corporate tax rates in Portugal
with Afonso Souto de Moura, Francisca Osório de Castro, João B. Duarte. Miguel Cortez Pimentel and Paulo Núncio, FFMS.
Abstract:The direct taxation on companies established in 1989, commonly known as Corporate Income Tax (IRC), has become an important tool for a country’s economic competitiveness. This study aims to contribute to the analysis of the impact that the Portuguese tax system and its successive changes have on the economic, social, and legal reality of the country, through the mapping of the reforms observed over the years. We do so by starting with an historical characterization and international contextualization of the evolution of Corporate Income Tax (IRC); we follow with modeling and analysis of the impacts of IRC on the main macroeconomic variables of the Portuguese economy and finally we produce a benchmark of best practices in international legislative production and proposals for institutional improvement.
The main results show that the corporate tax code has statutory rates that are amongst the highest in OECD, subject to more than 1350 substantive changes since its inception until 2021 and that the portuguese economic activity would benefit from an overall reduction in tax rates, as well as introducing institutional mechanisms that would promote the stability and predictability of corporate income tax structures.
The sudy can be accessed here, a factsheet here and here some short slides.