Personal Income Tax: Comprehensive or Dual? a Comparative Study of the Portuguese and Spanish Systems

• Autor(a) principal: Catarino, João Ricardo
• Data de Publicação: 2015
• Outros Autores: Vouga, Margarida Monteiro
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.5/28692
• topic: Personal income tax, comprehensive income tax, dual income tax, semi-dual income tax.

The personal income taxation systems are changing rapidly around the globe. Portugal and Spain share the territory of the Iberian Peninsula for centuries and their economies are intensively interconnected. They have however adopted different tax personal income systems. Portugal introduced in 1989 a comprehensive or unitary system that follows the taxation trends prevailing in many European countries based on the concept of accrued income. The different types of income are taxed together, normally at progressive rates. More recently, many European states have evolved towards semi-dual taxation to adapt taxation on personal income to the challenges of globalization, offshoring and disintermediation. (Brys, 2014) Spain has adopted a dual system model. This research points out the advantages and disadvantages of each model by comparing the solutions adopted in the Iberian countries, Portugal (which levies comprehensive income tax) and Spain (which has a semi-dual income tax). We argue that Portugal should adopt the semi-dual income tax because it reveals better adjusted to the public needs concerning the challenges of capital mobility, the needs of attraction foreign investment and the rise of tax competition between states due to economic globalization. The semi-dual income tax is simplified personal income tax model and turns out to be more competitive internationally.