IMPACT OF THE 2019 TAX CHANGE ON CORPORATE DEBT IN PORTUGAL: AN ANALYSIS ON EURONEXT LISBON COMPANIES
DOI:
https://doi.org/10.47820/recima21.v5i10.5674Keywords:
Tax Change, Debt, Interest, Deductibility LimitAbstract
The present article analyzes the impact of the 2019 tax change on corporate indebtedness in Portugal. This change, provided for in Article 67 of the Corporate Income Tax Code (CIRC) and regulated by Law No. 32/2019, expanded the concept of financing expenses, and transformed EBITDA into a true fiscal EBITDA. The analysis was conducted based on data from 37 companies listed on Euronext Lisbon, extracted from the SABI database. The results indicate that profitability, tangibility, company size, and the 2019 tax regime change are determining factors in debt policy. Tangibility and size are positively related to the level of indebtedness, in line with the trade-off theory, while profitability shows a negative relationship, consistent with the predictions of the Pecking Order theory. Additionally, the study reveals that, following the 2019 tax changes, companies reduced their debt levels on average. The said tax change had a negative impact on low-debt companies, leading to a reduction in their debt, and a positive impact on highly indebted companies, resulting in an increase in their indebtedness.
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