In a statement released today, the association led by Luís Miguel Ribeiro emphasises that the 2027 State Budget (OE2027) “must place economic growth and business competitiveness at the centre of economic policy.”

“Portugal is growing, but not enough to converge with the European Union. The upcoming budget must therefore create conditions for the economy to grow at a faster pace, driven by increased investment, productivity, exports, and value added,” it argues.

In this regard, the association calls for “a lighter tax burden on those who invest and create value” and a tax system “that fosters business growth, capitalisation, and the capture of new markets.”

Corporate income

Among the proposed measures is a 12.5% ​​corporate income tax (IRC) rate for the first three fiscal years for companies resulting from mergers between small and medium-sized enterprises (SMEs)—including a 30% uplift on eligible business integration costs—as well as the progressive reduction (leading to eventual elimination) of the state-level corporate surtax (*derrama estadual*) and a 150% uplift on internationalization expenses for corporate tax purposes.

The AEP also advocates for extending the direct SIFIDE tax incentive scheme beyond 2026—thereby “ensuring stability for R&D investment”—as well as exempting non-financial companies from Stamp Duty on financing for investment or working capital needs, strengthening incentives for capitalisation through equity injections, and simplifying advance tax payments.

“The Portuguese economy needs companies with greater scale that are better capitalised and more internationalised. Tax policy should encourage this process rather than penalise it,” the association emphasises.

For the AEP, another priority for the 2027 State Budget must be reducing the tax burden on labour and investing in workforce skills, given labour shortages and the difficulty of attracting and retaining talent.

Annual adjustments

To this end, it proposes reducing the progressivity of personal income tax (IRS) by having fewer tax brackets and implementing annual bracket adjustments.

It also advocates for a 50% corporate tax (IRC) deduction boost for costs incurred by companies on employee housing and for expenses related to highly qualified young staff, as well as counting modular training funded by European funds—when integrated into business association training plans—towards the mandatory 40 hours of continuous training.

To achieve a “more efficient State and a justice system that does not penalise companies,” it calls for “binding targets to progressively reduce the timeframes for economic and tax-related legal proceedings” to “reach an average resolution time of no more than 180 days as quickly as possible.”

It also proposes expanding the scope of “tacit approval” (where administrative silence implies approval) in cases not involving matters of significant public interest, and the systematic publication of public service performance indicators.

Amid pressure on energy costs, the AEP advocates for exceptional, temporary, and targeted support for sectors most exposed to rising energy costs—specifically through “direct subsidies for the most affected activities”—emphasising that “the competitiveness of Portuguese companies cannot continue to be penalised by energy costs that compromise their ability to compete in international markets.”

Regarding territorial cohesion, the business association seeks concrete measures to attract investment and economic activity to less dynamic regions, notably by raising the cap on taxable income eligible for the 12.5% ​​corporate income tax (IRC) rate to one million euros.

The goal is to create “conditions to attract anchor investments and generate spillover effects for micro-enterprises and SMEs in those regions.”

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