Government could give selective tax breaks in return for upping salaries

The Portuguese government is to propose giving selective tax sweeteners to companies which up staff salaries.

The move would link in with measures contemplated in the Wages and Competitiveness Agreement which is backed by unions. The proposed measure was discussed at a meeting with social partners on Wednesday.
Taking on board the “commitment to improve company productivity”, the Government has identified as one of the possible measures “a selective reduction in IRC (Corporation Tax) for those companies with a dynamic collective contracting, higher wages and a reduction in the wage scale”.
Furthermore, it foresees a “selective reduction in IRC for companies that invest in R&D, enhancing the conditions of the System of Tax Incentives for companies that invest in R&D (SIFIDE II) in the direct investment component”.
A reduction in IRC has been on the government’s agenda recently, with the Minister of the Economy, António Costa e Silva arguing for a blanket reduction in taxes for companies. However, this option has been ruled out by other government figures since the government’s programme only contemplates some specific situations for this benefit.