Portugal has one of the most unequal income distributions in Europe and poverty levels are high. The economic crisis has halted a long-term gradual decline in both inequality and poverty and the number of poor households is rising, with children and youths being particularly affected. Unemployment is one of the principal reasons why household incomes declined.
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Portugal is ranked 11th among the 34 OECD member countries in decreasing order with a tax wedge for an average single worker at 41.2% in 2014, compared with the OECD average of 36.0%.
This report contains the 2014 “Phase 2: Implementation of the Standards in Practice” Global Forum review of Portugal.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 120 jurisdictions which participate in the work of the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.
The Global Forum on Transparency and Exchange of Information for Tax Purposes published today 9 new peer review reports, including a Phase 1 Supplementary Report for Switzerland, demonstrating continuing progress toward implementation of the international standard for exchange of information on request.
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The tax burden in Portugal increased by 2.2 percentage points from 31.2% to 33.4, the largest rise amongst member countries in 2013. The OECD average was an increase of 0.4 percentage points from 33.7% to 34.1%. The Portuguese standard VAT rate is 23%, which is well above the OECD average. The average VAT/GST standard rate in the OECD was 19.1% on 1 January 2014.
The Global Forum on Transparency and Exchange of Information for Tax Purposes (referred to as "the Global Forum"), has released its peer review reports for Belize, Finland, Iceland, Nauru, Poland, Portugal, Sweden and Turkey.
Owing to slow growth and a relatively weak fiscal position, Portugal’s public debt had been rising for almost a decade when the global crisis struck, sharply increasing the deficit.
This paper illustrates possible trade-offs between two different fiscal consolidation strategies in Portugal: sticking to the nominal fiscal targets in the EU-IMF programme or allowing automatic stabilisers to work, while sticking to the structural primary deficit targets implied by the programme.
The process of fiscal consolidation and the need to step up the poor long term economic performance provide an opportunity to implement tax measures to improve efficiency and rebalance the economy.
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Agreement between Portugal and Bermuda for the exchange of information relating to tax matters