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Portugal's Galp and REN refuse to pay €60 million 'special tax'

galpTwo of Portugal's largest companies, Galp and REN, have bluntly refused to pay their outstanding ‘special contribution’ to the tax man as they argue that the tax is illegal and that they are taking court action to prove so.

Tax Authority inspectors have already paid a visit to Galp and REN’s head offices to 'have a chat' in an move triggered by the decision by the energy giants to keep the €60 million, for the time being.

In a statement today the Secretary of State for Tax Affairs, Paulo Núncio confirmed that if these companies do not pay the extraordinary energy company tax created in the 2014 State Budget, payable by 15 November 2015, he will proceed with coercive collection actions, as he would do with any other debtor who won’t pay up.

"The energy companies had effective taxation in 2012 of 31%. It is the highest effective corporate tax rate in all sectors," said Núncio in Parliament.

Núncio admitted also that Portugal's "energy companies are paying a rate far above the nominal corporate tax rate (25%)." He was answering questions in parliament about the sector, and added that, "The energy companies had an effective taxation rate in 2012 of 31%. It is the highest corporate tax rate in all sectors."

The Environment Minister joined in the offical criticism of the attitude displayed by REN and GALP, saying that taxpayers have to pay taxes "whether they like it or not."

"I'm obviously at odds with the decision that these companies have taken and they should not have this attitude. Those who have to pay income tax and corporation tax must honour their commitments regardless of whether they like or dislike a particular tax," said Jorge Moreira da Silva, skillfully failing to suggest what taxpayers should do if they assert that a tax claim is illegal.

The Minister was responding to a question raised by the socialists at the joint hearing of the Finance and Environment committees on the reform of the proposed 'Green Taxes' in the 2015 State Budget.

The attitude of the tax collector in chief is as expected but shows the inflexibility of the system he runs where any legitimate query, complaint of unfairness or inaccuracy is faced with official deafness.

Many tens of thousands of citizens have been sent inaccurate tax bills and are forced by the sender to pay up or have their assets seized.

Told to argue the case later, citizens often do not have the money left, or the time or the willpower to take on the state in court.

REN and Galp have served to highlight a system that assumed the state always is 100% accurate and operating legally, when experience suggests otherwise.

The government's view expressed today with little elegance by the Environment Minsiter, that taxpayers have to pay taxes "whether they like it or not," is representative of a system where the state is all, is always right and those that fund its insatiable appetite have zero choice in the matter.

Galp and REN are two grown up companies and they have a point to make as both companies argue that the special tax violates the principles of equality, something that Portugal's president is so keen on despite encouraging tax free Golden Visa foreigners to buy property here with no necessity actually to live in the country.

Both energy companies think also that the government is operating outside the law and by witholding payment may get some judicial action rather quicker than if they paid up and argued later.

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