“This adjustment of withholding tax in the pockets of the Portuguese on a daily basis, per month of salary, is very positive, but it is important to pay attention to this: what was often the fifteenth month that you had and with what was credited to cover additional expenses, may cease to exist.” The warning came from Paula Franco, President of the Order of Certified Public Accountants, in an interview with Negócios and Antena 1, which will be published in full this Monday.
The idea, by the way, is that the refund practically “ceases to exist” and that the tax withheld during the year “becomes much closer to what is actually due”, and “it is important that the Portuguese know this because they have to rely on these forced savings,” emphasizes Paula Franco.
Remember that the IRS withholding tables were updated in the first six months of the year, but from July they will be replaced by a new model with progressive mechanisms that will tailor IRS withhelds much more to the reality of each taxpayer. These new tables, also published in Diário da República, are “more fair, they’re progressive, they reflect more progressiveness” because they “use marginal rates exactly the same as final tax rates, and the current withholding doesn’t reflect,” the specialist explains.
However, he admits, it will be much more difficult for taxpayers to know whether they want to find out before or after the increase what their effective rate will be. The pay slip itself is expected to contain clear information about the effective IRS rate, “but when an employee wants to know how much he is going to keep and make such a forecast, he will have great difficulty.” In this sense, Paula Franco proposes to the government: “This measure, starting from July, would be very good if it were supplemented by a good simulator posted on the website of the tax office.”
