Business associations call for scrapping of first five IRS brackets – “taxes are immoral”

The Business Roundtable Portugal association (BRP), which brings together 142 business leaders, has sent an open letter to the government calling for the scrapping of the first five IRS tax brackets and an end to the extraordinary IRC tax levied on part of the taxable profits of companies on a determinate amount laid down in the IRC Code that is subject to non-tax exemption.

The letter, in addition to being addressed to the PSD/CDS-PP coalition government of Luís Montenegro, sent on the eve of the outline State Budget for 2026 being presented to parliament, has also bee sent to Portuguese MPs who have to approve the legislation for these two tax changes.

The association argues that Portugal needs to “reindustrialise with intelligence” to be “an active agent in the realisation of the single market” of the European Union at a time when “changes in geopolitics are leading to the narrowing and approximation of value chains”.

For this reason, business leaders understand that this “ambition requires a new contract between the State, companies and civil society that takes a prominent position for the creation of wealth and that encourages and celebrates the success of our people and companies by taking advantage of the enormous opportunities”, it states.

According to the BRP the government needs to act on four fronts: ‘licensing and red tape’, ‘fiscal and administrative justice’, the ‘tax system’ and in ‘energy’ and in the tax justice sphere in which the association highlights the IRS and IRC measures.

The BRP has suggested to the government and MPs an urgent rejigging of “IRS up to 1.5 times the average national salary to address the desire of 60% of the Portuguese who want to grow”, suggesting “eliminating the first five income tax brackets. A the moment, the first five tax brackets cover collectable taxes on earnings up to €28,400 per annum.

“We need to smash the poverty trap that condemns almost one quarter of workers who are trapped in the national minimum salary. The State ends up with 62% of the salary increase of those brave enough to escape the national minimum wage and that is immoral” says the BRP.