Company bosses call for tax slash for small companies

IRC tax on small and medium companies and companies of average capitalisation, which is currently being discussed in parliament, should fall to 15% on the first €100,000 of taxable revenues and not €50,000 as suggested by the government, according to a leading business association.

This would double the current limit foreseen under the law. This is the proposal from the Confederation of Trade and Services of Portugal (CCP), which on Thursday will present the government with its dossier for the State Budget which is being prepared and should be delivered to parliament on October 10.

With a fall in IRC on the way in any case, the government’s own proposal regarding IRC for the first tranche of SME profits that currently has a differentiated rate compared to the general IRC rate, is that from 2026 taxation should decrease from 16% to 15%, but only up to the first €50,000 of the taxable amount. This proposal was approved in general last week and the business confederation led by João Vieira Lopes is calling for the creation of a specific regime for small companies that would also reduce their tax rate compliance costs.

This would raise the gross income under the current simplified regime to a gross revenues threshold of €500,000, reducing obligations such a tax reporting and on the goods in circulation regime.

The Business Confederation of Portugal (CIP) also has proposals for small companies such as creating a specific tax regime for micro-companies, which would simplify the life of these companies.

This confederation, however, will only present its proposals in two weeks’ time. The CCP is also suggesting that the government change its companies capitalisation tax incentive regime so that interest and other forms of incentives on payments for supplies, capital allowances and advances made by a company’s partners should have a higher rate than currently exists for financing through interest, setting SMEs apart from other companies – suggesting a spread of 6%.

Looking at Portugal’s companies network in general, the confederation is asking for greater incentives for investment, proposing that the reduction foreseen in the Investment Support Tax Regime (RFAI) should increase from 30% to 35%.

Source: Negócios/JE; images: CCP/Ahresp