Lisbon, July 18, 2025 (Lusa) - The president of CIP, Armindo Monteiro, said the reduction in corporate income tax announced by the prime minister was positive, arguing that, for SMEs, in addition to tax cuts, the government should create a new tax regime with small businesses in mind.
Speaking to the Lusa news agency, the leader of CIP - Confederação Empresarial de Portugal (Portuguese Business Confederation) considered “extremely positive” the announcement made by Luís Montenegro on Thursday at the opening of the state of the nation debate in parliament, where he confirmed that the cabinet would approve a bill on Friday to further reduce company income tax in 2026, 2027 and 2028.
The government plans to lower the general rate from the current 20% to 19% next year, followed by a further reduction to 18% in 2027 and, subsequently, a decrease to 17% in 2028.
For the CIP, this “is a positive measure” because it brings Portuguese companies “closer to the conditions that European entrepreneurs already have - lower tax rates”, which is good “for boosting investment, whether from Portuguese or foreign investors”.
However, Armindo Monteiro said that the business confederation views the reduction in a “restrained” manner.
“We naturally view it positively, but with restraint, for two reasons: firstly, because it is lower than what the 25th Constitutional Government promised;” the second issue is that companies will fully implement it in three years and, given the current global situation and all the difficulties companies face, [of which] the tariffs that the Trump administration imposed are just one example, it was important that this happened now, so that companies here can receive some form of support,” he claims.
Last year, the previous Montenegro government aimed to reduce the corporate tax rate at a faster pace, by two percentage points, until it reached 15% in 2027.
However, it eventually backed down to secure the support of the PS in the State Budget for 2025. As an alternative, the government proposed an annual reduction of one point to implement over a longer period.
The company income tax rate fell from 21% to 20%, instead of the 19% initially intended by the previous government.
The rate applied to the first tranche of profits of small and medium-sized enterprises (up to €50,000 of taxable income) is already lower than the general rate.
Montenegro also announced in parliament that the government will propose a reduction from the current 16% to 15% in 2026.
Armindo Monteiro told Lusa that “in addition to lowering the corporate income tax rate, it is necessary to effectively review the framework [for SMEs], i.e., to create a tax regime to tax these activities that are below a certain turnover”.
“Streamlined verification and administrative processes benefit these small businesses by reducing costs when they comply with their obligations,” he explains, referring to “small businesses, small restaurants, small cafés, small supermarkets, workshops, various services provided by sole traders”.
Journalists asked whether lawmakers should create a separate tax code, and the CIP leader explained that, in the confederation’s opinion, “lawmakers should consider a separate regime—a regime for micro and small businesses, which would be simpler for determining the amount [of tax] to be paid”.
PCT/ADB // ADB.
Lusa
