According to ECO, a package of measures to promote growth, competitiveness, internationalisation, innovation, and sustainability has been approved.

This is how the Government described the Accelerate the Economy Programme, which was approved on Thursday by the Council of Ministers, which consists of 60 measures in areas such as taxation, investment, tourism, and the environment.

From Oliveira de Azeméis – a choice that Luís Montenegro admitted was not indifferent, due to the interaction between academia and innovation and the industrialisation that makes the municipality “highly” productive –, the Prime Minister guaranteed that the Government’s primary objective “is to make life easier for companies so that they can create more wealth and, as a result, pay better wages”.

Alongside the Minister of Economy, Pedro Reis, and the Minister of Finance, Joaquim Miranda Sarmento, one day after having defended that taxation should be the cornerstone of economic policy, the leader of the Executive stated that he wanted to “accelerate economic growth as a prerequisite” for “a more prosperous country and, through this prosperity, a fairer one”.

IRS reduction

The document contains several measures set out in the Government Programme, such as a reduction in the IRC from 21% to 15% by 2027. Without introducing any new measures compared to what was previously promised, the Government is moving forward, with a reduction in the rate to 19% in 2025. This has been one of the main concerns of the Executive, which considers that the cost of lost revenue of 500 million euros per year will be offset by indirect effects on the economy.

Pedro Reis stated that the programme aims to respond to four challenges of the economy: “Scale, consolidation, capitalisation and financing; innovation, entrepreneurship, and talent; sustainability; sectoral densification and reindustrialisation”, believing that “by achieving this” it is possible to achieve “the objectives of the economy in the coming years”.

The most emblematic measures to gain scale, consolidate and promote capitalisation include the review of the goodwill tax deductibility regime, the expansion of access to the participation exemption regime, and the tax deduction for capital gains and dividends obtained by individuals in the capitalization of companies.

At the same time, the eligibility value for the cash VAT regime will quadruple from 500 thousand euros to two million euros, to reduce pressure on companies' treasury and the concept of VAT groups will be created, allowing economic groups, according to their concept for IRC purposes, to have a single declaration of this tax.

Finance

In terms of financing, the Executive announced the launch of the “State to pay in 30 days” plan, the extension of the stamp duty exemption to centralized treasury management operations, and the launch of "Tourism Bonds 2024", a measure recovered from the times of Pedro Siza Vieira as Minister of Economy, who even put forward applications for companies, but whose debt issuance never materialised.

As part of the main measures to promote entrepreneurship and innovation, tax benefits for investing in R&D are changing again, with Sifide funds now having five years, instead of three, to make investments in this area.

One of the main new features is the regulation of the Tax Incentive for Scientific Research, Innovation and Human Capital (IFICI1+), with the aim of expanding the universe of tax incentives for scientific research and innovation to a larger group of qualified professionals and companies.

The issue at hand is the rule introduced by the previous Government in the State Budget for 2024 (OE2024) for qualified staff, such as teachers in higher education and scientific research, after the elimination of the Non-Habitual Residents Regime. To operationalise the new regime, the Executive will regulate the regime through an ordinance, Miranda Sarmento announced during the press conference.

Montenegro argued that the package of measures is limited to “concrete decisions”, highlighting that five have already been completed in the approval of five legislative instruments – two on IRC, one on maritime matters, one on VAT and one on defence industries. Alongside him, when asked about the willingness of opposition parties to approve measures that require parliamentary ‘green light’, Miranda Sarmento assured that the Executive will speak “with all the parties”.

“We will seek to approve these measures together with all parties,” she said. However, the willingness of most parties with parliamentary representation seems limited. The parliamentary leader of the PS, Alexandra Leitão, considered the package “a set of isolated measures, most of which are very vague, not scheduled and not accounted for”, with the exception of the proposal to reduce the IRC to 15% by the end of the legislature.

“The government does not have an absolute majority, it says it wants to engage in dialogue, but we are systematically confronted with very expensive measures that will already greatly burden the next State Budget and greatly reduce the possibility of negotiation,” she warned, quoted by Lusa. The Left Bloc, the PCP and the Livre party also criticized the program, considering that it mainly benefits large companies.

On the other hand, the Liberal Initiative praised the cut in IRC, similar to the position expressed by the CDS-PP, one of the parties that supports the Government.

Among the employers, the Portuguese Business Confederation (CIP) considered, in a statement, that the programme “reflects a clear effort to put Portugal on the path to sustained growth”, also highlighting the expected reduction in IRC, while the Tourism Confederation (CTP) defended, in a statement, that the programme “strategically considers Tourism, protecting it and is based on the fundamental importance of the Portuguese economy”.