Resolution by the Assembly of the Republic No. 87/2013 publishes the approval of the Modifying Agreement of the Convention between Portugal and Switzerland for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital, and of its Additional Agreement, signed in Bern on 26th September 1974, signed in Lisbon on 25th June 2012.
Resolution by the Assembly of the Republic No. 87/2013 (text of the Modifying Agreement in Portuguese and French)
Resolution by the Assembly of the Republic No. 88/2013 publishes the approval of the Convention between the Portuguese Republic and the Republic of Peru for the Avoidance of Double Taxation and the Prevention of Tax Evasion with respect to Taxes on Income, as well as the corresponding ratification by the President of the Portuguese Republic.
Resolution by the Assembly of the Republic No. 88/2013 (text of the Convention in Portuguese, Spanish and English)
According to a news article published last week by Público newspaper, Angolan Secretary of State for Foreign Affairs, Manuel Augusto stated that the government was working to create more ways of attracting investment. “Everything the Angolan government is doing to revise and update the private investment law and in matters related to attracting investment can only be for the better,” pointed out Manuel Augusto as he spoke to the press after a working meeting with his Portuguese counterpart Francisco Almeida Leite, who was in Luanda on an official five-day visit. He reassuringly went on to add, “Neither Portuguese investors nor any other foreign investors will be adversely affected, in fact the opposite is true.”
According to Público newspaper, Manuel Augusto pointed out that the goal of tax reform was to encourage national production, helping to reinvigorate the textile industry, which required foreign investment in cotton production. Francisco Almeida Leite also stated that the future new customs regulations and the revision of the Foreign Investment Law in Angola were topics of debate at the meeting with Manuel Augusto, adding that he received news that tax reform was already being addressed by the Cabinet. He further added, “We are going to await its approval and the ensuing results that can help improve relations, encourage more investment and give Portuguese entrepreneurs more confidence.”
Before the meeting with Manuel Augusto, the Portuguese official met with Angolan Secretary of State for Cooperation, Ângela Bragança. According to Ângela Bragança, relations with Portugal are “excellent.” Officials from both countries are already preparing a first summit (bilateral) that will likely be held during the second half of the year, during which they hope to set a new course for cooperation between Portugal and Angola. “We hope to set dates very soon and that when our leaders meet they can reach a new milestone in the relationship between both countries,” concluded Manuel Augusto.
With legislative changes in Angola, it becomes even more important to correctly structure international investments from a tax point of view. Learn more about the advantages of Madeira for investing in Angola and see how to maximize your operations through this jurisdiction: Investing in Angola
The Portuguese Cabinet has approved a bill that transposes the European directive regarding a common tax regime for the payment of interest and royalties between associated companies from different member states.
The financing cost of entities that are part of transnational economic groups will be reduced by this bill and the consequent abolition of withholding tax on payment of interest and royalties between related entities. This will make investment in Portugal more attractive by reducing associated costs and increasing the national economy’s competitiveness and job figures.
On 30 March 2013, Decree-Law no. 71/2013 was published approving an optional VAT cash accounting system that shall take effect as of the last quarter of 2013.
This system essentially stipulates that VAT shall only be payable at the time of total or partial reception of the payment made by the clients. Likewise, the deduction of VAT paid upon acquisition of goods and services to be used for the activity of the taxpayer shall only be possible when the respective payment is made to its suppliers.
Initially, this regime shall only be available to taxpayers who pay VAT and have not had a turnover of over 500,000 euros in the previous calendar year, taxpayers who have not exclusively performed an exempt activity, who are not covered by the exemption regime, who have been registered for VAT for at least twelve months and whose tax position has been settled.
Taxpayers who exercise this option shall be obliged to remain in the VAT cash regime for at least two consecutive calendar years.
The intention of the Portuguese government is to improve the financial situation of these companies by reducing the pressure of the financial costs associated with paying VAT to the state before receiving the respective payments.
The Portuguese government recently announced a tax investment package to be applied in 2013. Among the announced measures we highlight the Extraordinary Investment Tax Credit that can reduce the effective Corporate Income Tax rate of International Business Centre of Madeira (IBC) companies to a rate of 1.5%.
Companies that conduct commercial, industrial or agricultural activities that have organized accounting services, whose tax situation has been settled and whose taxable profit has not been determined by indirect methods are eligible.
These companies may deduct 20% of the investment they make between 1 June 2013 and 31 December 2013 from their corporate income tax for a period of 5 years (in the event of insufficient taxable income during the previous years). For the purposes of applying this measure, the investment has a limit of 70% of taxable income and a maximum of 5 million euros.
Investments must be made in tangible fixed assets that are bought new, and perishable intangible assets, they can prove are allocated to the company’s operating activity, excluding assets for personal use (e.g. furniture, recreational vessels). These assets must be acquired up until 31 December 2013 and allocated to the company’s operating activity up until 31 December 2014.
Eligible companies can therefore substantially reduce their corporate income tax.
NEWCO, within the scope of the services it provides its clients, can help decide on the eligibility of investments and compliance with the formalities necessary for the aforementioned tax credit.
Please consult the official Portuguese government information regarding this 2013 tax investment package.
Figures published yesterday by the National Statistics Office (NSO) report that Malta’s GDP grew by 1.6% in real terms in the first quarter of 2013. This makes Malta the best EU performer as far as GDP growth is concerned.
The NSO said GDP reached €1,654.8 million, an increase of 3.7 per cent compared to the corresponding quarter last year.
Also yesterday, Eurostat, the EU statistics office, said that GDP fell by 0.2% in the euro area (EA17) and by 0.1% in the EU27 during the first quarter of 2013, compared with the previous quarter.
Read the full NSO News Release.