Among other tax incentives, the new Madeira International Business Centre (MIBC) regime introduced by Portugal provides reduced corporate income tax rates of 4% (in 2012) and 5% between 2013 and 2020.

Under the new regime companies are required to prepare transfer pricing documentation and make available for inspection documentation covering the last four years. The documentation must be prepared according to the Portuguese requirements laid down in Decree-Ruling no 1446-C/2001.

On the Annual Tax and Accounting Return (IES) transfer pricing information will have to be disclosed. Taxpayers must indicate that the requirement is met and the deadline to submit IES is 15 July for companies adopting the calendar year.

The following penalties are addressed by the General Regime on Tax Infractions (RGTI):

  • €20,000 per year, per company for late delivery of transfer pricing documentation;
  • €45,000 per year, per company for noncompliance related to omission/lack of evidence in the Annual Tax and Accounting Return;
  • €75,000 per year, per company for non-compliance related to  incorrect documentation; and
  • €150,000 per year, per company for non-compliance related to the failure to prepare transfer pricing documentation.