OE2021: AEP defends VAT reduction, extension of moratoriums and return of simplified lay-off

"The proposals point to concrete measures and are the result of an analysis carried out by the study office of AEP, taking into account the feedback we received from our associates and from the entrepreneurs who are part of our General Council," said an official source of the association with Lusa.

AEP wants to see in the State Budget for 2021 a temporary two-point cut in the normal VAT rate, an extension of credit default and the return of the simplified lay-off while the effects of the pandemic last.

In a document with proposals for the State Budget for 2021 (OE2021), to which the Lusa agency had access, the Business Association of Portugal (AEP) points out “support for liquidity”, “maintenance and creation of jobs” and “capitalization and investment” as the three “vertices of support to companies” that must be prioritized.

"The proposals point to concrete measures and are the result of an analysis carried out by the study office of AEP, taking into account the feedback we received from our associates and from the entrepreneurs who are part of our General Council," said an official source of the association with Lusa.

In the "support for companies 'liquidity", AEP proposes the creation of a "public fund to support companies' treasury, without bureaucracy and with zero interest rate", the extension of tax and social contribution deferrals for companies “As long as the effects of the pandemic continue” and “the settlement of State debts to private suppliers”.

The association also proposes "extending bank credit moratoriums to families and companies at least until June 2021 (another three months)", "ensuring that publicly guaranteed credit lines reach companies that need them quickly enough" and effect the current account of private companies with the State, “at all levels of dimension”.

At the apex of the “maintenance and creation of jobs”, there is a demand for a temporary cut of two percentage points of the normal VAT rate, to be applied “as of the last quarter of 2020”, which “translates a relative decrease in rate of 9% in Mainland and Madeira and 11% in the Azores ", to" stimulate economic activity, mainly via domestic demand, while external demand is weak ".

As he recalls, "Germany has applied a similar but more comprehensive measure".

The return of the simplified lay-off regime “as long as the effects of the pandemic remain” is another measure that AEP demands to safeguard the maintenance of employment, as well as the creation of a “transversal program of reindustrialization for a decade” , to be financed “mainly by community funds, [but] guaranteeing the necessary national contribution of OE2021”.

“Creating, in a transparent manner, a 'covid-19 emergency fund' within OE2021 (expenditure authorization), to be used only if the extension of the pandemic requires additional funds for health and support for families and companies” is another measure contained in the AEP document, as well as “ensuring that the reform of green taxation and the implementation of green hydrogen technology are carried out with the most appropriate degree of gradualism to preserve the competitiveness of companies and generate new areas of 'green business'”.

Still in terms of employment, AEP defends the communication of a 'mitigation plan for covid-19 scenarios that does not limit economic activity', in order to “give confidence to companies and people in the resumption of their activity and in the non-conditioning restrictive action in the event of an increase in the severity of the pandemic situation ”.

For the association, it is also important to “boost the success of the Extrajudicial Regime for the Recovery of RERE Companies)”, namely “by creating an incentive (tax and / or other) for those who buy credits from a company in recovery to have an advantage in buying the remaining credits of that company (aggregation of credits) if you bet on maintaining the operation and recovery of the company ”.

With regard to the 'capitalization and investment' of companies, AEP wants to reinforce the provision of state guarantees in export credit insurance, an acceleration of the full operation of Banco de Fomento and the “more extensive and expeditious” use non-refundable incentives.

The conversion into capital transfer in favor of companies of part of the State guarantees in credit lines for micro, small and medium-sized companies and the creation of a “tax incentive for the voluntary and temporary conversion of credit into capital in the case of SMEs and 'Mid Caps' at risk of closure, applied to individual credits from suppliers but extended to other creditors ”, are other proposals of AEP.

In this area of ​​'capitalization and investment', the association believes that it would also be useful to “establish an extraordinary asset revaluation regime that is very favorable, to counter the decapitalization of companies”, and “extend, at least during 2021, the incentive to corporate restructuring. for micro, small and medium-sized companies created in the Supplementary State Budget of 2020 ”.

Still proposed is the registration of the deduction of tax losses under IRC as a tax asset in the balance sheet “for viable micro, small and medium-sized companies and its gradual use to pay any taxes”.

In addition to the reindustrialization program, AEP defends complementary policies at the level of the Investment Tax Code (such as the reinforcement of the deduction regime for retained and reinvested profits, the deductions for SIFIDE's innovation expenses and the extension after 2020 of the contractual tax benefits to the productive investment) and the IRC Code (progressive and programmed reduction of the normal rate of IRC and “significant” cut in the state tax rates in the various levels, with the objective of eliminating them “in the long term”).

Regarding the Statute of Tax Benefits, the association proposes to eliminate the limit of tax base (25 thousand euros) in the scope of the tax benefit related to the installation of companies in the interior regions and to extend the benefit to 'Mid Caps' , currently restricted to micro, small and medium-sized companies ”.

The connectivity infrastructures are another concern of the business association, which wants to see the national component of complement to the community financing ensured, which will allow to proceed with the projects postponed until now to restructure / expand the ports of Leixões and Sines and with the investments planned in the railway. , at the same time that “the best decision is made regarding the new Lisbon International Airport, in terms of cost-benefit analysis”.

Still highlighted by AEP is that the public sector "must ensure the purchase of goods and services necessary for the functioning of all Public Administrations (central, regional and local) with priority to national companies".

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