On July 11, were introduced in Portuguese Parliament the Law Proposals 11/XVI/1 and 12/XVI/1. Such proposals are aimed to authorize the Government to amend the Corporate Income Tax (CIT) Code regarding the participation exemption regime and the tax rate to be applied in the years 2025 to 2027, respectively.

Law Proposal 11/XVI/1 – and its authorized Decree-Law – has the purpose of attracting investment and boosting the growth of Portuguese economy, which would be possible by reducing the necessary percentage of share capital or voting rights for the participation exemption regime to be applied. In this concrete case, that reduction would be from 10% to 5%.

The estimated reduction applies to shareholdings held on the date of entry into force of the law, and the period of holding is counted since the acquisition date of 5% of the share capital or voting rights.

Law Proposal 12/XVI/1 – and its authorized Decree-Law – provides for a gradual reduction of the CIT rate to be applied, to all companies, regardless of its size, in fiscal years from 2025 to 2027.

Thereby, the objective of this Law Proposal is to change the article 87.º of CIT Code, which will be amended by:

• Reduction, over three years, of the general tax rate from the 21% in force to 15% (19% in 2025, 17% in 2026, 15% in 2027);

• Reduction, over three years, of the tax rate applicable to small or medium-sized companies and small-medium capitalization companies, from 17% in force to 12,5% (15% in 2025, 13% in 2026, 12,5% in 2027), for the first € 50.000 of taxable income. The excess amount will be charged at the tax rate provided for in previous point.

This measure are aimed to enable companies to grow, consolidate their position, increase disposable income, increase salaries, and create new jobs.

Law Proposals will now be debated and voted on (in general and in specific) in the Portuguese Parliament and, in case of approval, they will then be promulgated by the President of the Republic and published in the Portuguese Official Gazette.