Portugal's Economic Development Hindered by State: AEP Proposes Strategic Changes

AEP's Bold Statement on Economic Development

The AEP – Associação Empresarial de Portugal has raised a critical alarm, stating that the State has not managed to stop being an obstacle to the country's economic development. This assertion comes amid discussions regarding the State Budget for 2025, which the AEP insists should be viewed as a strategic tool for the future rather than just an annual exercise.

Call for a National Strategy

The association advocates for a national strategy that encourages robust and sustainable economic growth, emphasizing the central role of companies as the primary creators of wealth and jobs. Given that financial resources are limited, the AEP stresses that budgetary options must prioritize wealth creation and aim to position the Portuguese economy among the most developed in the European Union.

Taxation Concerns

The AEP highlights the urgent need to improve the country's attractiveness as an investment destination. They point out that the high tax burden on businesses and families is a significant deterrent. Portugal currently holds the second-highest maximum IRC rate in the OECD at 31.5%, which is counterproductive to economic policy objectives and hampers business expansion.

Key Proposals by AEP

1. Tax Attractiveness: Reduce, simplify, and ensure predictability in taxation.
   • Lower corporate tax rates to 15% by 2027.
   • Enhance fiscal incentives for innovation and environmental transition.
   • Gradually eliminate autonomous taxation.
   • Significantly reduce labor taxation.

2. Labor Market Flexibility: Revise labor laws to attract and retain talent.
   • Encourage companies to hire young people beyond immediate recruitment needs.
   • Support training initiatives for workforce qualification.
   • Facilitate the integration of immigrant labor.

3. Improving Company Financing: Enhance access to finance and capital for businesses.
   • Establish financing lines for private investments aided by European funds.
   • Adjust capitalization tools to better fit the Portuguese business structure.

4. Business Resizing: Promote economies of scale for SMEs.
   • Incentivize SMEs to reinvest 50% of their profits into capital.
   • Support mergers and acquisitions with fiscal amortization of goodwill.

5. Bureaucratic Simplification: Streamline the relationship between the State and businesses.
   • Increase revenue through economic development while reducing taxes.
   • Simplify legal and fiscal frameworks to enhance investment attractiveness.

The AEP, led by Luís Miguel Ribeiro, firmly believes that without these changes, the State will continue to obstruct the economic development of Portugal. The proposed reforms are vital to creating a more conducive environment for business growth and investment.