The new Director General of the Treasury, Helena Borges, has been thrown in at the deep end with demands for a clear explanation from MPs as to why Portugal’s rich people seem to be paying proportionally less tax than its hard-working families.
Finanças has selected 240 taxpayers with high incomes and millions in assets, who pay a lower personal income tax rate than expected. This is just a sample from a greater total and all can expect to be reviewed.
Helena Borges sent a document to MP before a parliamentary hearing to discuss these anomalies. the document did not 'name names,' but Borges says her department so far has taken enforcement action in 44 cases.
To be on the hit list for further investigation, the taxpayer needs to have €5 million in assets and a three year average income of €1 million a year.
Borges was in Parliament last week at the Budget, Finance and Administrative Modernisation committee meeting where the former Director General of the Treasury, José Azevedo Pereira, also was asked to give some insight on the issue of high net worth individuals paying low taxes.
The story hit the media in December 2015 when Pereira was interviewed on SIC and expressed anger at the way the rich pay less than the poor.
In the document sent in before the meeting, Helena Borges outlined various things that flagged up misbehaviour and evasion including holding companies without any evidence of income or transactions, personal expenses booked as businesses expenses, undeclared income earned abroad and changes of tax residence to overseas while remaining in Portugal.
The tax bills paid by the sample 240 was relatively low compared to that of most citizens but not all will be guilty of evasion and fraud as many are able to access legitimate tax efficiency schemes such as the use of subsidiaries, trusts and foundations, changing tax residence, using specialist tax advisors, and using offshore structures and bank accounts.
Borges said the investigation has been thwarted by ooverseas tax administrations and banks being reluctant to release information due to claims of “professional confidentiality.”
The rich list sample paid an average of 29.54% in tax last year, while higher rate taxpayers paid 46% but Borges did point out that those on similar incomes will pay different tax rates depending on the source of those incomes.
Comments
No-one is penalising yet the lawyers and accountants who put the tax declarations together !
As we have seen with businesses not declaring their VAT through a cheat device - in Portugal there is no comprehension at all of where the money for schools, roads and hospitals come from. At least 2 generations have grown up assuming it is all from Brussels ! So has no value - and cheating it is healthy. Normal.
Thousands of hours are wasted in lessons about the "Portuguese Empire that no one else believed in" and "The Pink Map". These should be diverted towards simple maths and lessons in paying taxes.