BE wants to charge "assets" to banks on Deferred Tax Assets – The Economic Journal

Left block wants written agreement with PS to give more clarity to proposals - The Economic Journal


The Parliamentary Group of the Left Bloc (BE) presented yesterday in the Assembly of the Republic a bill that aims to create "the provision of assets on Deferred Tax Assets (AID) covered by the Special Regime approved by Law no. 61/2014, of August 26 ". At stake is € 3.8 billion in IDA that was created in 2014 and still "today remains in the banks' balance sheet", although the "special regime applicable" to these assets was repealed in 2016. "If the State provides this guarantee and assume this risk, then it must have an effective remuneration for this service rendered to the bank, "defend the blockholders.

"In 2016, the Special Regime for the IDAs, approved by Law No 61/2014 of 26 August, was terminated. Although this was an important step, the problem of stock however, has been maintained, and its impact will still be felt for many, many years, as we know that € 3,8 billion of IDA created at the time and covered by this scheme remain on the banks' balance sheet ", begins with context of the explanatory statement of the bill.

"AIDs are assets arising from the fact that in Portugal there are different rules for the admission of impairment losses in accounting and taxation, being stricter in the latter in order to avoid the reduction of losses in order to reduce the tax . The difference between these two registers, in theory, leads to the payment of a higher tax (IRC) in the year in which it occurs, this amount being as AID for later, this being deducted from the amount to be settled from IRC in the year of acceptance the fiscal year of the impairment record, or in the next five years, in case of tax loss in that year (like any other tax loss in IRC), "explained the deputies of the BE.

"With the financial crisis, stock impairment losses and AID has exploded, making them a substantial part of the assets and capital of banks in Portugal. In 2013, EU Regulation No 575/2013 is published, which states that impairment AIDs are devalued in the calculation of banks' capital ratios, since it is understood that given the large amount of AID in some banks and the outlook medium-term profit, it would not be feasible to stock of AID to five years and, therefore, the prospect of recovery was zero, "they remember. "This decision jeopardized the capital ratios of several Portuguese banks, artificially supported by stocks of AID. In this context, the PSD / CDS Government created, by Law 61/2014, the so-called special regime for deferred tax assets. This regime has established a State guarantee on IDAs, so that they can be accepted for the determination of capital ratios – thus denominating 'eligible' AIDs. "

"In Portugal the special regime of 2014 was revoked, limiting its application to the stock existing as of December 31, 2015, and the Government now wants to review the tax rules in order to approximate the moment of accounting registration and the tax deduction of impairments. However, to date, banks have recorded billions of impairments. They did not pay IRC because they made a loss, but they still retained the right to deduct those losses in their future taxes – forever. And more, in cases where instead of profit they register losses, they can ask for this money from the state, "the blockers criticize.

For the Parliamentary Group of the BE "it is very clear that part of the AIDs generated in the years of the financial crisis, and which have been sustaining the capital ratios of the Portuguese banks, were not created as any counterpart for taxes paid in those years. Nor do they constitute a future right of deduction in the light of existing tax rules, since they could not realistically be deducted in the subsequent five years. That is, eligible AIDs were an untransparent way of capitalizing Portuguese banks by deferring future costs to the public purse. "

"In total, these eligible AIDs total about 3,800 million. Only BCP has almost 2,000 million, which means it can go for many, many years without paying IRC, "they warn. "In 2018 the State paid the New Bank 154 million for AID and, according to the Court of Auditors, there were more requests from six banks for 632 million euros."

"If we have to live with these values, if the State pays this guarantee and assumes this risk, then it must have an effective remuneration for this service provided to the bank, following a mechanism already applied in other European countries and recommended by DG COMP. For the Left Bloc this is the minimum that one can and should demand in return, "they emphasize in the bill.



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