June 1, 2022
The European Commission wants that Portugal simplify its tax system, increasing the efficiency of the Tax and Customs Authority (AT) and reducing the administrative burden on taxpayers.
This is one of several recommendations made by the community executive to the country in the Country-Specific Recommendations released as part of the European Semester Spring Package.
“Improve the effectiveness of the tax system and the social protection system, particularly by simplifying the two structures, strengthening the efficiency of the respective administrations, and reducing the associated administrative burden,” the European Commission writes in its recommendations to Portugal.
The degree of adjustment of the IRS withholding tables (the monthly rate applied to the salary) to the IRS levels is at issue (through which the annual tax due in the IRS adjustment in April of the following year is calculated). The government has been adjusting the withholding tables, but some, including the European Commission, believe the disparity is still too great.
However, this is not the only flaw in the Portuguese tax system that the European Commission has identified. Another European recommendation is to simplify the tax benefits currently in place in Portugal, which is also a concern of the government. The current system, which includes over 500 tax breaks spread across more than 60 laws, is “quite complex and not sufficiently transparent.” “Continuous monitoring would benefit the economic efficiency of tax expenditure,” say European experts.
In addition to identifying that problem with the IRS, the technicians point out that the IRC structure creates “complexity” for taxpayers (companies in this case) and a “additional burden” for tax authorities because, in addition to the national tax, there are surcharges such as the municipal surcharge and the state surcharge.
Source: The Portugal News
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