- Portugal’s VAT system has several oddities and complexities that make it difficult to comply with and have contributed to base erosion.
- Portugal ranks 34th out of 38 OECD countries in terms of tax competitiveness.
- Simplification and base expansion are needed to make Portugal’s VAT system more efficient and raise revenue.
- The VAT system in Portugal has a standard rate of 23 percent, higher than the EU average.
- Portugal’s VAT system ranks 26th out of 38 OECD countries, with a narrow base that covers only around half of final consumption.
- In 2021, Portugal’s VAT collected only 51 percent of ideal revenue, below the EU average.
- The gap between actual and ideal VAT revenues can be attributed to compliance issues and policy choices that erode the tax base.
- VAT reform options in Portugal should address compliance issues, VAT registration thresholds, reduced rates, and exemptions.
Source: taxfoundation.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
