The IRS rate cuts will only affect the 2024 budget balance if the income tax tables in effect that year change, and that effect will be accounted for from both a state and national accounting perspective.
The rules for calculating the deficit determine that in the case of the IRS, “there is no adjustment” when switching from public accounting (which works from a cash point of view) to national accounting (which works from a liability point of view and is disclosed to Brussels) regarding the impact of the measures on this tax, UTAO coordinator Rui Baleiras told Luce.
Thus, he noted, without changing the income tax tables, the IRS rate cuts will not affect the 2024 balance sheet calculation in the national accounting.
In the case of VAT, the logic is different: tax payable in the last quarter of 2023 and paid in February 2024 is considered last year’s income for national accounting purposes and this year’s income for government accounting purposes.
The reduction of IRS rates by 0.25 to 1.5 percentage points applicable to the first six tax revenue groups is included in the PS proposal approved by Parliament and in the meantime made public by the President of the Republic.
The measure applies to income beginning in 2024, but without new withholding tables, its full effect will be determined in 2025 during the annual tax assessment.
The government has been asked whether it intends to align income tax tables with the new tax rate structure, but the government has not yet made any commitment to this scenario.
“We will have the opportunity to talk about this in the coming days,” Prime Minister Luis Montenegro said Friday while speaking to reporters in Porto do Lobito, Benguela province, on the last day of an official visit to Angola.
Asked whether this could happen this Friday, the day of the Council of Ministers meeting, he replied: “We’ll see soon.”
PS leader Pedro Nuno Santos said he saw “no reason why the government should not review the income tax tables this year and why the reduction could not be reflected as early as 2024.”
However, he recalled, the measure is applied in 2025 (for income from 2024) “so that there is no violation of the braking rule”, and therefore, in order for it to come into force from 2024, it must “depend on the decision of the Government”.
Income tax tables depend on government regulations.
Author: Lusa
Source: CM Jornal
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