With a view to stimulating the economy and attracting investment, the National Assembly approved, through Law No. 4/19, of 18 April 2019, a number of amendments  to the Industrial Tax Code, to take immediate effect.

Among the most significant changes introduced are the following:

• Foreign exchange variations of more than 7% per annum on fixed assets and liabilities will be disregarded as income or cost for Industrial Tax purposes;

• Interest on any type of loans made by equity holders or on shareholders’ loans will be regarded as a deductible cost, with only the portion that exceeds the average annual reference rate of interest established by the Central Bank being added to taxable income;

• Stand-alone taxation  has been eliminated on improperly and undocumented expenses, despite the latter remaining non-deductible;

• Clarification that any expense will be deemed improperly documented if the relevant supporting document does not comply with all the requirements set forth in the legal regime for invoices and equivalent documents;

• Amendments to the regime on provisional assessment and payment in respect of sales, including a provision stating that taxpayers incurring losses in the preceding financial year are exempt from provisional assessment;

• The Urban Property Tax on unrented property will be accepted as a deductible cost in respect of Industrial Tax;

• Elimination of the provision that rents received for engagement in any activity subject to Urban Property Tax were not taxable revenues or earnings for Industrial Tax purposes. However, it should be noted that revenues subject to Urban Property Tax will remain deductible against the net profit calculated for the purposes of assessing Industrial Tax as provided for in the Industrial Tax Code; and

• Practicing a liberal profession within a corporate or associative context is now considered to fall within the scope of Industrial Tax. Similarly, civil companies incorporated without a commercial form will now be considered taxable persons subject to Industrial Tax.

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