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The existence of tax benefits is inherently linked to the pursuit of extrafiscal objectives deemed socioeconomically relevant by the legislator. Given that their utilization implies a negative impact on the amount of tax revenue collected (tax expenditure), an analysis was carried out on their distribution across the various taxes borne by corporate income tax (CIT) taxpayers in the period between 2020 and 2023. The findings indicate that tax benefits were predominantly utilized in the Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles, Manufacturing and in Real Estate Activities sectors. Geographically, their concentration was highest in the districts of Lisbon, Porto, Braga, Aveiro, and Funchal. In terms of entities’ characteristics, tax benefits were primarily claimed by entities within the lowest (0€) and the highest (above €250 million) turnover brackets and by those reporting positive net results in the assessed years. Moreover, the tax benefits most relevant to these entities were largely designed to achieve economic policy objectives and were primarily concentrated within the corporate income tax. Among these, the System of Tax Incentives for Business Research and Development (SIFIDE) and the Investment Support Tax Regime (RFAI) were the most utilized. At the firm level, an analysis of the ten largest beneficiary entities reveals a strong presence of the automotive sector, primarily due to the registration of vehicles eligible for a special tax regime in the national market. Additionally, the analysis highlights the existence of tax benefits with low utilization, both in terms of the number of eligible entities and the financial magnitude of their claim. This finding underscores the need to assess the relevance of certain tax benefits, with the dual objective of enhancing efficiency and simplifying the Portuguese tax system.
Date of last update: 11/02/2025
