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The Secretary of State for Tax Affairs (SEAF) maintains that the suspension of payments on account is a measure that made sense in 2020, but that it does not make sense next year since it is a “highly unfair” measure because it would only benefit those companies that made a profit in 2020, which was a year of crisis. António Mendonça Mendes’ assessment was made at the JE / EY Conference on OE2021 and it seems that the day the vote on the suspension of payment on account proposed by the PSD is expected to have an impact on revenues of 1,511 million euros in 2021 if approved, according to calculations made by the Technical Unit for Budgetary Support (UTAO).
“If we exempt companies in 2021 from making payments on account, what we are really doing is allowing only those companies that, despite the pandemic crisis of 2020, have obtained benefits, have the advantage that next year they will not make any payment on account ”, defended Mendonça Mendes this Tuesday, November 24. For this reason, the SEAF considers “very unfair that we deviate from the resources absolutely necessary to support the economy as a whole and especially the companies that resisted the least during this year.”
The official points out that “the adjustment of payments on account in 2021 is a highly unfair measure, because it would only benefit those companies that obtained profits in 2020, which was a year of crisis”, adding that “it does not mean that there are no other mechanisms to support companies that need to continue to have the ability to resist ”.
SEAF recalls that it is a “powerful” measure that has meant more than one billion euros of liquidity for companies this year. “One billion euros of taxes that companies should not pay and that companies have not advanced. But if this measure made sense in 2020, let me make it very clear that, on the part of the government, it does not seem to be a measure that makes sense in 2021, “he concludes.
It is recalled that in this year’s Supplementary Budget an extraordinary limitation of payments on account in the IRS or IRC to be made in 2020 was introduced: up to 50% of the respective amount, if the average monthly billing is communicated through the invoice electronic referring to in the first semester of 2020 there is a drop of at least 20% in relation to the average verified in the same period of 2019. And 100% of the respective amount, provided that the monthly average of billing reported in the same terms and for the same period shows a fall of at least 40% in relation to the average observed in the same period of 2019. Or, the activity of the taxpayer falls within the classification of economic activity of accommodation, restaurants and the like and is you get 50% of your total turnover in the previous tax period is related to these activities.
The suspension of payment on account weighs 1,500 million in 2021
On Tuesday, November 24, experts from UTAO, who support the parliament in matters of public finances, reported on the PSD amendment proposal and explained the impact of the suspension of payment on account in just over 1,500 million. euros, limiting the effects to the minimum amount already estimated by the Government (between 1,500 and 3,000 million euros). They also concluded that revenue lost in 2021 is almost fully recovered in 2022.
UTAO recognizes that the amount lost in 2021 “is not fully recovered”, but ends by clarifying that “the difference corresponds to the cases in which a settlement would occur in favor of taxpayers, that is, in which payments are made on account 2021 would be higher than the tax settlement “.
According to the initial text of the Social Democrats, whose vote is scheduled for this Tuesday, “the Payment on Account is suspended during the period in which the restrictive measures to the operation of economic activities are in force, starting to be applied according to the result of the fiscal year on actual IRC payment ”. But today the PSD announced that this relief should only be applied in the first three months of the year. This in view of “the needs and difficulties of public accounts”, explained in Parliament the deputy Afonso Oliveira, noting that, in this circumstance, the party will propose an amendment to the proposal of the Social Democrats, “which will come into force only in the first quarter of 2021, by SMEs and cooperatives with decreases of 25% compared to the same period ”.
Currently, the law determines the possibility that companies covered by this temporary regime do not make, on the scheduled dates, the first and second payment on account in 2020, being able to regularize the total amount in question “until the deadline for payment of the third payment. [15 de dezembro], without encumbrance or charges ”.
Two billion tax support for companies
In the JE / EY conference on OE2021, SEAF points out that in the complementary budget, “the energetic way with which we acted in what was the adequacy of payments on account for companies that had a break in their invoices”, adding that globally Tax support for companies amounted to two billion euros in the two state budgets that came into effect this year and in the measures provided for in the OE2021 proposal that will be voted on this Thursday, November 26.
“Why was this measure so important in 2020?”, Mendonça Mendes wonders, recalling that payments on account take into account what was the result of the previous year and therefore, he emphasizes, “it would not be fair for companies to make a payment on account based on a calculation of a result in 2019 which is certainly not the result they will have in 2020 ”.
That is why, says the governor, in the supplementary budget it was so important to use this instrument that it allowed each of the companies, depending on their activity interruptions, to adjust and even to the limit not to pay a payment on account, bringing what it is their surrender of what is the result they will actually have.
“Within this tax aid of more than two billion euros for companies, the whole strategy we have made to support all companies that continue to have investment capacity is also especially relevant,” stresses SEAF. Therefore, he says, the extraordinary investment tax credit recovered in 2020 and remains in the first half of 2021.
Mendonça Mendes points out that this “is a very powerful incentive for companies that have programmed investments and continue to have the ability to invest so as not to delay these investments. And because they don’t postpone these investments, they can have a tax advantage over what the tax payment is to make.
For OE2021, SEAF also highlights “what is the elimination of the increase in regional taxation for those companies that have had a positive result in the last three months and in 2020 due to this crisis they did not have it”, considering that “it would be very unfair that the worsening of the regional taxes that exist in the law be maintained and that is why it is withdrawn for the year 2021 ”.
Three budgets in nine months
António Mendonça Mendes highlights that proposal OE2021 represents the third State Budget presented in nine months. Remember that the Government presented the OE for 2020 this year based on what was the calendar of the legislative, which occurred in October last year and therefore the calendar with the inauguration of the new government, the OE 2020 only entered effective on April 1 of this year, because it was already approved in 2020.
Then, due to the pandemic crisis, as soon as the Budget for 2020 came into force, the Supplementary Budget was approved, which was approved in June. And last October another State Budget was presented.
“For this reason, it is normal that we have to read, in particular the fiscal policy, in the three budgets. I would like to recall that in the set of these three budgets, only the fiscal measures to support companies represent more than two billion euros as a result of the renewal of SIFIDE [Sistema de Incentivos Fiscais à Investigação e ao Desenvolvimento Empresarial] that we made in the OE for 2020, either due to the very significant changes we made in the deduction regime of retained and reinvested earnings or also in what was the increase in the limits for the special rates of corporate income tax for SMEs and for companies in the interior.
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