LISBON: Portugal’s secretary of state for fiscal affairs said on Wednesday that the reduction of the tax burden foreseen in the Socialist government’s draft 2017 budget “is not as large” as is needed, but that steps can and are being taken to reduce additional costs that taxes entail without bringing in revenue for the state. Tax burden still larger than desirable but other costs cut – gov’t official
“While there is a reduction in the tax burden [implied in the budget bill], that reduction is not as large as families and companies would need and as any government would like to make,” said Fernando Rocha Andrade at a conference in Lisbon organised jointly by the Law Faculty at Universidade Católica and the consultancy firm PricewaterhouseCoopers (PwC). Noting that “the secretary of state for fiscal affairs always likes to announce tax cuts and never tax rises,” Rocha Andrade argued that, “given the impossibility of making a greater reduction in the tax burden, the country must make an effort to reduce the charges that taxes create for companies and which are not translated into tax revenues.”
According to the secretary of state, planned changes to the rules on value-added tax for imported goods passing through customs are “the most important of these measures” because they eliminate “an absurd consequence” of the current system that penalises companies that import raw materials to use in their own production processes. “In the regime currently in force, it is fiscally more advantageous to import to produce through a foreign port such as Algeciras or Rotterdam than to import to produce through a Portuguese port such as Sines or Leixões,” he said. “It makes no sense for this to be the case.”
This, he explained, is because “if a company imports a production good via Algeciras, it does not pay VAT in customs because the final destination is not Spain” and this “the VAT is cleared and deducted in the same declaration and there is only payment of VAT at the end of the productive regime” – that is, in Portugal. For imports through a Portuguese port, by contrast, the current system requires that “either the VAT is paid on the spot or the company must provide a guarantee to delay payment of the VAT, normally by 60 days, and even so it must pay this VAT in full before the possibility of its deduction or reimbursement”, Rocha Andrade explained.
This difference, he said, penalises Portuguese ports and is now to be eliminated after a wait of “more or less 20 years”, thanks to the computer systems of the customs and VAT offices finally now being linked up. In this way it is possible “to reduce companies’ financial costs without any reduction on state revenue,” he pointed out.
