The IRS rate cut will only have an effect on the balanced budget in 2024 if the withholding tables in effect this year are changed, considering that effect both in terms of public and national accounting.
The deficit calculation rules determine that, in the case of the IRS, “there is no adjustment” in the transition from public accounting (which operates from a cash perspective) to national accounting (which operates from a commitment perspective and is what reveals to Brussels) on the effect of the measures on this tax, UTAO coordinator Rui Baleiras told Lusa.
The IRS annually deducts 10 euros from a salary of 900 and 402 euros from a salary of 3,000.
In this way, he pointed out, without changing the withholding tax tables at source, IRS rate cuts have no impact in the calculation of the balance for 2024, in national accounting.
In the case of VAT, the logic is different: the tax owed in the last quarter of 2023 and paid in February 2024 is considered as income from last year in terms of national accounting and as income from this year in public accounting.
The reduction of between 0.25 and 1.5 percentage points in the IRS rates applied to the first six taxable income brackets is included in a PS proposal approved by Parliament and, in the meantime, promulgated by the President of the Republic.
The measure applies to income from 2024, but without new withholding tables, its effect will be fully determined in 2025 at the time of the annual tax settlement.
The government has been asked whether it intends to adjust the withholding tax tables to the new rate structure, but has not yet committed to any scenario.
“We will have the opportunity to discuss this in the coming days,” Prime Minister Luís Montenegro told reporters in Porto do Lobito, in the province of Benguela, on the last day of his official visit to Angola.
Montenegro ends its official visit to Angola this Thursday with a trip to Benguela
Asked if this could happen on Friday, the day of the Council of Ministers, he replied: “We will soon see.”
PS leader Pedro Nuno Santos said he did not see “There is no reason for the Government not to review the withholding tax tables at source this year and so that the reduction cannot be reflected in 2024.”
However, he recalled, the measure is applied in 2025 (on 2024 revenues) “so that the brake rule is not violated”, so, for it to come into force from 2024, it would have to “depend on a decision of the Government”.
The tax withholding tables depend on a Government order.
Source: Observadora
