According to a study by the Vítor Gaspar division of the International Monetary Fund, the “flying” of multinational companies resulted in an annual deviation of 9% in all IRC revenues.
The Portuguese tax authorities may lose approximately US$500 million in corporate income tax (IRC) each year, accounting for 9% of the total income of the tax year. ) A study published yesterday showed that in Portugal, from a tax perspective, they will pay lower taxes to other territories.
according to A new study proposed by the Director of the Budget Affairs Department of the International Monetary Fund, “Taxing Multinational Corporations in Europe”, Vítor Gaspar and his tax representative, Victoria Perry, cited the latest work on this issue. In the context of fierce international competition, Portugal seems to be one of the largest tax-transporting countries in terms of IRC. One.
In some European countries (analysis of 10 countries), France seems to be the country most affected by the revenue and profit transfers announced by multinational companies outside of the Gaul tax system. Here, the annual loss can reach 19% of IRC’s total revenue.
At the other extreme, some countries seem to be winning competitions, providing a more friendly tax environment for multinational companies. The UK ranks among the best, earning another 5.6% of tax revenue each year in this way. Finland and Denmark are also winners.
As mentioned earlier, the Portuguese tax authorities may lose 9% of IRC income each year, almost twice the global average (5.1%). According to the latest 2019 General State Account (General State Account), Portugal’s investment in IRC that year was approximately 6.3 billion euros. 9% said the above loss was 500 million euros.
For Portugal, considering the country’s budget needs, the income distribution of the country’s companies established in the country is important because the country’s debt exceeds 130% of its gross domestic product (GDP). When the “Stability Pact” comes into force again, Portugal should be forced to generate a continuous budget surplus in order to reduce this proportion to 60% within 20 years.
In Portugal, the transfer of funds is usually caused by the activities of so-called holding companies (SGPS), which eventually announce tax breaks outside the country, such as the Netherlands or Luxembourg, where the tax rate is lower. Or in the offshore area. Both countries are from the Eurozone, so competition is active and effective. For example, there is even no trading risk.
In a debate organized by the Economic and Social Commission of the European Union, the former Minister of Finance of Portugal encouraged EU countries to “reform the tax treatment of multinational companies” in order to eliminate this distortion.
The current IRC system is “not the most suitable”
According to the International Monetary Fund, the current corporate tax system is “not the most appropriate”. Considering the “urgency of the agreement”, it is necessary to have an “international political debate” on this. Through “international competition” and “transition of profits of multinational corporations” from one country to another on these taxes, “the purpose is to reduce their tax payments”, and “major problems” are being generated.
The International Monetary Fund said: “In Europe, the high distance between economies has increased tax transfers in the region.” With the pandemic, the situation seems to be more severe.
“Loss of income [na sequência da fuga das multinacionais de um território para outro] Given the devastating effects of covid-19, the situation is now more serious, which has put heavy pressure on the public finances of many countries.
“One of the most impressive aspects of the European statutory corporate income tax rate has been steadily declining from an average of 35% in 1995 to 21% in 2019.”
According to OECD data, Portugal will continue to appear in the list type, with a load rate of 31.5% in 2019. In any case, the efficiency (after deducting benefits and income levels) is low and is now about 20%. However, from a fiscal point of view, Portugal is also one of the most expensive countries compared to other European countries.