portugal- vat (bad?) history
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IHRSA EUROPEAN CONGRESS – MADRID 2013 The Perils of Political Inactivity in your Country and the OpportunitiesTRANSCRIPT
PORTUGALVAT (BAD?) HISTORY
IHRSA EUROPEAN CONGRESS – MADRID 2013
The Perils of Political Inactivity in your Country and the Opportunities
VAT abnormal path
2006 2008 2010 20110%
5%
10%
15%
20%
25%
21%
5%6%
23%
In 3 Years!!!
Troika has landed in Lisbon in 2011… not for holidays!
VAT effects• Reduction of VAT exemptions,
including food & beverage;
• VAT increase in electricity and gas;
• Subjection to the higher rate of VAT of goods and services previously subject to reduced or intermediate rates.
And a lot more• Special Taxes on Consumption
• Heritage
• Fight tax evasion
• Wage cuts in the public sector
• Increase in Vehicle taxes and tobacco
• Increase user fees in hospitals
• Strong increases in Public transports
Overall performance final 2012
• The revenue for 2012 decreased by 3.2% over the previous year
• The net tax revenue accumulated showed a variation of -6.8%, which has an underlying trend of -9.5% in direct taxes and -4.7% in indirect taxes.
• With regard to indirect taxes is to refer to the contraction of economic activity and the reduction in disposable income, with an impact on consumption, most noticeable in the ISV and VAT
Budgetary Implementation of state tax revenue (January-December)
Direct Taxes
Indirect Taxes
VAT
TAX REVENUE
In other words, what headaches do we face?
• GDP (2011: -1% | 2012: -3,3% | 2013E: -1,6%) = -6%
• Unemployment (10,8 in 2010 to 16,5%; 24,6% [15-34] years; 60% of long-term unemployment)
• Emigration (more than 200k left PT)
• Drop in general Income (-25%), due to taxes increase and wage cut
• Private consumption decrease (2011: -4% | 2012: -5,6% | 2013E -3,4%
• VAT: 17 points increase
• Discrediting politicians and politics
• Middle class exhausted
• Lack of confidence & self-esteem, …, ‘What else?’
But, concerning fitness:
GOVERNMENT INFORMED US
THAT HAS COLLECTED 122%
MORE IN VAT THAN IN 2011
Example:
Food & beverage sector:
2011 VAT(13%) income: 250 M€2013 VAT(23%) income: 600 M€*
+140%* expected
2014 State budget has confirmed 23%.
No hopes, but we have some “allies”
Our strategy
• Our members would not tolerate that AGAP ´accepts´ a normal VAT rate, but we are no longer using VAT as flag;
• Probability to lower VAT is greatly reduced in actual economic situation. Energy & food were also affected so before any measure taken place on physical activity, other sectors may be considered...
• Also we would like to disconnect public awareness from vat message and entrepreneurs should face business as it is, without excuses... Management is an issue!
• That's why it must be under an international agenda and not PT/ES issue.
Way out & alternatives
Nutrition service and counselling (paramedic activity, exempt of tax) Legal procedures
• AGAP has asked legal and fiscal advice to experts (Deloitte and lawyers)• Need to update constitution
registry to include nutrition services, as complementary (?) activity
• Change VAT framework by the Tax Authority
• Be registered and certified by the National Health Authority
