IRS refunds are expected to arrive earlier this year

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The Secretary of State for Tax Affairs, António Mendonça Mendes, said in an interview with Lusa, it is “expected” that IRS refunds will start to be processed earlier this year than in 2020.

“What I can guarantee is that we are in a position to carry out the IRS campaign, proceed with the liquidations and proceed with the refunds. It is normal and it is expected that repayments this year may be relatively quicker than they were last year, ”said António Mendonça Mendes.

Last year, the first refunds were processed in April, the 21st, that is, 21 days after starting the campaign for the delivery of the annual IRS declaration, a longer period of time than that recorded in previous years, but which Mendonça Mendes considers to have reflected the speed “appropriate for the moment”, or that is, the fact that the country was at that time facing its first general confinement.

This year, he acknowledges, the context is “similar” to last year, but there is a big difference: an accumulated experience that in 2020 did not exist, namely with regard to the fact that a significant part of the employees of the Tax Authority (AT) be performing their teleworking functions.

Despite the conditions, AT “managed to settle long before the legal deadline to do so ”(which the law sets on August 31) and, over the weeks,“ operations have become increasingly routine ”, which has allowed the repayment times to become“ very similar to those of years previous ”, said the government official, without wanting, however, to set a date for the beginning of the tax refund process.

“Our expectation is to make a safe campaign in the way we do sales so that no one is harmed, not even the public purse, nor the people, who have the expectation of receive your refund as quickly as possible”, He affirmed.

Mendonça Mendes pointed out that the Government has sought to reflect policy decisions in the retention tables, such as the extension of the taxable income brackets from five to seven or the creation of the IRS Jovem.

The objective is that the withholding tax comes closer and closer to what is due and that “the refunds arise more from what are either the municipal tax benefits or deductions” and not result “properly from an excess of retention that may exist”.

Taking into account the adjustment in the withholding tax tables made in 2020, the average amount of reimbursement may, therefore, this year be smaller size.

In the same interview, the government official said there is “no reason” so that a worker who has been in a simplified lay-off is not covered this year by the automatic IRS, if he meets the other requirements.

The automatic IRS will cover workers this year for the first time independent, but only those who, in 2020, exclusively passed receipts through the Finance Portal, which means that those who had support for activity reduction will not be able to benefit from this automation.

Review of the macroeconomic scenario

The Stability Program (EP), which will be presented in about two weeks, will include a review of the macroeconomic scenario, also announced Mendonça Mendes.

The official stated that the data “are still being worked on”, specifying that, with regard to the forecast of tax revenue, “it is very important” that everyone is aware that the decision for a new general confinement has an “effect very significant ”from the economic point of view which is reflected“ in what is tax revenue, namely in the income from indirect taxes such as VAT ”.

Budget execution data released by the Directorate-General for Budget (DGO) indicate that the State’s tax revenue decreased 13.2% in January compared to the amount collected in the same month of 2020 and that the year-on-year decrease was accentuated in February (falling 17.4%), with all taxes registering a negative performance.

Regarding the fact that the tax burden registered in 2020 the highest value ever – since 1995 – at 34.8% of the Gross Domestic Product (GDP), Mendonça Mendes said that this is explained by the fact that the activity economical have come down more than tax and contributory revenue.

For Mendonça Mendes, the evolution of tax and contributory revenues showed the resilience of the observed labor market, which surprised all estimates.

Installment plans for debt plus tax

Mendonça Mendes said that the Government is preparing a proposal to make automatic payment plans for installments of tax debts that are the revenue of the State.

The proposal is still being finalized, but the objective is that the automatic installment plans that, last year and this year, were created as an exceptional measure for the payment of IRS and IRC debts up to 5,000 euros (private) and 10,000 euros ( companies), come to be provided for by law e can cover more typologies of tax debts.

“The goal is for it to be for all taxes that are central government revenue, including withholding taxes or VAT ”and“ for these amounts that do not require a guarantee to be provided, ”he said.

Regarding the Government’s regulation to the measure included in the State Budget for 2021 (OE2021) on payments on account of the IRC, Mendonça Mendes stated that it was made in order to allow small and medium-sized companies to deliver the first and second PPPs in installments, and that micro-enterprises can make only 50% of the second payment on account, even though it had profits in 2020.

The government official also observed that the companies that benefit from these limitations or reductions in payments on account are those that, despite the crisis, managed to make a profit.