CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Exhibition of Motives

In the framework of a common policy adopted in the Eurozone with a view to returning the

confidence to the financial markets and their agents and to cope with the speculative attack on the

single currency, the Portuguese government has made the decision to reduce the budget deficit of

9.3% to 7.3% in the current year 2010.

For the purpose, and because the Stability and Growth Programme (PEC) for 2010-2013

provided, for 2010, the deficit reduction from 9.3% to 8.3%, the Government decided to adopt a

set of additional measures to that Program.

New targets for the public deficit go from 7.3% of GDP in 2010

(formerly 8.3%) and 4.6% of GDP in 2011 (formerly 6.6%).

Thus, it becomes necessary to propose to the Assembly of the Republic the approval of a joint

of measures motivated by the general interest, at an economic-financial juncture

exceptional of instability and speculative attacks on the financial markets that affects

several states of the Union Europe, to which Portugal is not an alheio.

In this context, and in addition to the measures on the expenditure side, the Government considers

necessary to adopt with urgency an additional set of tax measures, so as to

to strengthen and accelerate the fiscal consolidation strategy planned in PEC 2010-2013.

Thus, it is predicted: i) the increase, by 1 percentage point, of all VAT rates, the normal,

the intermediate and the reduced; ii) an additional taxation at IRS headquarters, by the

increase, by 1 percentage point, of the general rates of this tax applicable up to the 3.

of income and by 1.5 percentage points from the 4-level, as well as an increase

corresponding in the IRS liberatory rates; iii) an additional taxation at IRC headquarters,

applying a surcharge corresponding to a stroke of 2.5 percentage points

companies whose taxable profit is greater than EUR 2 million; and iv) the aggravation of

taxation at the tax office of the stamp of the granting of credit to consumption.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

With respect to the additional taxation at IRS headquarters, it is realized through the fixation

of a new general rate table, which formally focus on the whole of income

of 2010 and which therefore do not affect consolidated pretéritit taxation situations

jurydicate-fiscally. In addition, so as to ensure that taxpayers only suffer

addition corresponding to seven months of the year, the additional fees of 1% and 1.5% are

object of a weighting, applying in 2010 only at 7/12 of its value. Only in the

Context of the State Budget for 2011 will introduce the necessary adjustments to the

table so as to reflect the full implementation of the new rates next year.

A reduction in transfers to the State Corporate Sector is expected, strengthening

the adoption of measures for rationalization and financial sustainability, as well as the

reduction in 5% of the remunerations of political officeholders, public managers and

equated.

The reinforcement of the expenditure reduction goes still by the strict control of the recruitment of

workers in public functions, as well as by a set of control measures

budget to specifically enshrine in the decree-law that runs the State Budget

to 2010, inter alia, by means of the reinforcement of the budgetary balance rule in the

services and in autonomous funds and the reduction and capactivation of appropriations relating to

consumes intermediate.

On the reduction of transfers from the central state budget to the

regional and local administrations, such is done under the Framework Act

Budget that, being a law of enhanced value, makes it possible, in your Article 88, to be

fixed transfers lower than those provided for in the Local Finance Act and the Law of the

Regional Finance, should there be any special circumstances that jeopardize the

Stability and Growth Programme, as are the verified circumstances

currently.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

The possibility of forecasted reduction depends always on the verification of circumstances

exceptional imperiously required by the strict observance of the obligations arising

of the Stability and Growth Programme and the principles of proportionality, no

arbitrio and reciprocating solidarity, and lacks prior hearing of constitutional bodies and

legally competent of the subsectors involved.

It will be promoted to hearing by the Assembly of the Republic of the National Association of

Portuguese Municipalities and the National Association of Freguestics.

Thus:

Under the terms of the paragraph d) of Article 197 (1) of the Constitution, the Government presents to the

Assembly of the Republic the following proposal for a law:

Chapter I

Fiscal Measures

Section I

Tax on the Income Of Singular Persons

Article 1.

Amendment to the Income Tax Code of Singular People

Articles 68, 71, 101 and 102 of the Income Tax Code of Persons

Natural, abbreviated, abbreviated by the IRS Code, approved by the

Decree-Law No 442-A/88 of November 30 shall be replaced by the following:

" Article 68.

...XX_ENCODE_CASE_One ...

1-percent ... namely:

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Collectable Income

(euros)

Fees

(percentage)

Normal

(A)

Average

(B)

Up to 4793 11.08 11.080

From more than 4793 up to 7250 13.58 11.927

From more than 7250 up to 17979 24.08 19.179

From more than 17979 up to 41349 34.88 28.053

From more than 41349 up to 59926 37.38 30.944

From more than 59926 up to 64623 40.88 31.667

From more than 64623 up to 150000 42.88 38.049

Higher than 150000 to 45.88

2-percent ... ago.

Article 71.

...XX_ENCODE_CASE_One ...

1-Are subject to withholding of the source at the definitive title, at the liberatory rate of

21.5%, the following yields obtained in Portuguese territory:

a) [...];

b) [...];

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

c) [...].

2-Are subject to withholding of the source at the definitive title, at the liberatory rate of

21.5%, the income from securities paid or placed at the

provision of the respective holders, residents in Portuguese territory,

due to entities that are not domiciled here to which it may

impute the payment, through entities that are

mandated by debtors or holders or ajam on account of one or

others.

3-[...].

4-Are subject to withholding of the source at the definitive title, at the liberatory rate of

21.5%, the following yields obtained in Portuguese territory by

non-residents:

a) [...];

b) [...];

c) [...];

d) [...].

5-[...].

6-[...].

7-[...].

8-[...].

9-[...].

10-[...].

11-[...].

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Article 101.

...XX_ENCODE_CASE_One ...

1-[...]:

a) 16.5%, dealing with Category B income referred to in para.

c) of Art. 3 (1) of income of categories E and F or of

heritage increments provided for in points b) and c) of paragraph 1 of the

article 9;

b) 21.5%, dealing with income arising from the activities

professionals specifically provided for in the list referred to in the article

151.

c) 11.5%, dealing with Category B income referred to in para.

b) of paragraph 1 and in the paragraphs g) and i) of Article 3 (2), no

understood in the previous paragraph.

2-[...].

3-[...].

4-[...].

5-[...].

6-[...].

7-[...].

Article 102.

...XX_ENCODE_CASE_One ...

1-[...].

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

2-A all payments per account is equal to 76.5% of the amount

calculated on the basis of the following formula:

[...].

3-[...].

4-[...].

5-[...].

6-[...].

7-[...]. "

Section II

Tax on the Throughput of Collective Persons

Article 2.

Addition to the Tax Code on the Incomes Of Collective Persons

They are deferred to the Tax Code on the Incomes Of Collective Persons, approved

by Decree-Law No. 442-B/88 of November 30, Articles 87-A, 104.-A and 105.

with the following:

" Article 87.

State spill

1-On the portion of taxable profit greater than € 2000000 subject and not

exempt from tax on the income of legal persons ascertained

by taxable persons residing in Portuguese territory who exercise, the

main title, an activity of a commercial, industrial or

agricultural and by non-residents with stable establishment in territory

Portuguese, focuses an additional fee of 2.5%.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

2-When the special taxation regime of the groups of

societies, the rate referred to in the preceding paragraph focuses on profit

Taxable ascertained in the individual periodic declaration of each of the

societies of the group, including that of the dominant society.

3-The taxable persons referred to in the preceding paragraphs shall proceed to the

settlement of the additional spill in the periodic declaration of income

referred to in Article 120.

Article 104-The

Payment of the state spill

1-The entities that exercise, in the main title, an activity of a nature

commercial, industrial or agricultural and the non-residents with establishment

stable must proceed to the payment of the state spill in the terms

following:

a) On three additional payments on account, according to the rules

set out in paragraph a ) of Article 104 (1);

b) Up to the last day of the deadline set for the sending of the periodic declaration

of income referred to in Article 120, by the difference that exists

between the total value of the state spill calculated there calculated and the importances

delivered on account in the terms of Article 105.

c) Until the day of the sending of the replacement declaration to which the

article 122, by the difference that exists between the total value of the spill

state there calculated and the already paid importances.

2-There is room for reimbursement to the taxable person, for the respective difference, when

the value of the state spill ascertained in the declaration is lower than the value

of the additional payments on account.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

3-Are applicable to the state spill payment rules not referred to

in the present article the rules for payment of income tax

of the legal persons, with the necessary adaptations.

Article 105-The

Calculation of additional payment by account

1-The entities obliged to make payments on account and payments

special on account must carry out the additional payment on account in the

cases in which in the previous taxation period was due to stroke

state in the terms referred to in Article 87.

2-The value of additional payments on account due to the terms of the

point ( a) of Article 104 (1)-A is equal to 2% of the part of the profit

taxable higher than € 2000000 relative in the taxation period

previous.

3-When the special taxation regime of the groups of

societies, is due to additional payment on account by each of the

societies of the group, including the dominant society. "

Section III

Value Added Tax

Article 3.

Amendment to the Value Added Tax Code

Articles 18 and 49 of the Value Added Tax Code, approved by the

Decree-Law No. 394-B/84 of December 26, abridgingly designated by Code of the

VAT, shall be replaced by the following:

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

" Article 18.

[...]

1-[...]:

a) For imports, transmissions of goods and services benefits

list constants I append to this diploma, the rate of 6%;

b) For imports, transmissions of goods and services benefits

list II constants appended to this diploma, the rate of 13%;

c) For the remaining imports, transmissions of goods and benefits of

services, the rate of 21%.

2-[...].

3-The rates to which the points are referred a) , b) and c) of paragraph 1 are,

respectively, from 4%, 9% and 15%, concerning the operations which, of

agreement with the special legislation, if they consider themselves carried out in the Regions

Autonomous of the Azores and Madeira.

4-[...].

5-[...].

6-[...].

7-[...].

8-[...].

9-[...].

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Article 49.

[...]

In cases where invoicing or its registration is processed by

values with tax included, in the terms of the previous articles, the

clearance of the corresponding taxable base will be obtained through the division

of those values by 106 when the tax rate is 6%, by 113 when

the tax rate is 13% and by 121 when the tax rate is 21%,

multiplying the ratio by 100 and rounding out the result, by defect

or by excess, for the nearest unit, without prejudice to the adoption of

any other method conducing the identical result. "

Article 4.

Amendment to Decree-Law No 347/85 of August 23

Article 1 of the Decree-Law No. 347/85 of August 23 is replaced by the following:

" Article 1.

1-Are set at 4%, 9% and 15%, respectively, the tax rates

on the value added to which the points are referred a) , b) and c) of paragraph 1 of the

article 18 of the Code on Value Added, approved by the

Decree-Law No 394-B/84 of December 26 to be applied to transmissions

of goods and benefits of services which are considered to be carried out in the Regions

Autonomous of the Azores and Madeira and on imports whose landings

customs take place in the same Regions.

2-[...].

3-[...]. "

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Section IV

Selo Tax

Article 5.

Amendment to the General Table of the Selo Tax

The 17 appropriation of the General Selo Tax Table, appends to the Selo Tax Code,

is approved by Law No. 150/99 of September 11, it is replaced by the following:

" 17-[...].

17.1-By the use of credit, in the form of funds, goods and other

values, by virtue of the granting of credit to any title except in cases

referred to in the appropriation 17.2, including the assignment of credits, the factoring and the operations

of treasury when they involve any kind of funding to the transferee,

adherent or debtor, considering, always, as a new grant of

credit the extension of the term of the contract-on the respective value, in

function of the term:

17.1. 1-[...].

17.1. 2-[...].

17.1. 3-[...].

17.1. 4-[...].

17.2-By the use of credit by virtue of the granting of credit in the scope

of credit contracts to consumers covered by the

Decree-Law No. 133/2009, of June 2, considering, always, as

new granting of credit the extension of the contract term-on the

respective value, depending on the time limit:

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

17.2. 1-Term credit of less than one year-for each month or instalment-0.07%.

17.2. 2-Term credit equal to or greater than one year-0.90%.

17.2. 3-Term credit equal to or greater than five years-1%.

17.2. 4-Credit used in the form of current account, bank discovered

or any other way in which the term of use is not determined

or determinable, on the monthly average obtained through the sum of the balances in

debt ascertained daily, during the month, divided by 30-0.07% percent.

17.3-[ Previous money 17.2 ]. "

Chapter II

Business Sector of the State

Article 6.

Captivations

1-Stay captive € 300000000 of the money in Chapter 60 of the Ministry of Finance and

of the Public Administration to transfer from the State Budget, specifically to

companies that integrate the business sector of the state, be it the title of compensation

compensatory or increase in capital and subsidies, whatever their nature.

2-A deceit of the monies referred to in the preceding paragraph may only be carried out for reasons

exceptional, being subject to permission from the member of the Government responsible for the

area of finance, which decides the amounts to be declines depending on the evolution of the

budget implementation.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Chapter III

Regulatory entities

Article 7.

Management balances and transient results

They constitute general revenue of the State of 2010, 85% of the accumulated value of the balances of

management and ascertained transient results at the end of the 2009 financial year of the entities

regulating, specifically:

a) Bank of Portugal;

b) Institute of Insurance of Portugal;

c) Commission of the Securities Market;

d) Authority of Competition;

e) Health Regulatory entity;

f) Regulator of Energy Services;

g) Food and Economic Security Authority;

h) ICP-National Communications Authority;

i) Regulatory Authority for Social Communication;

j) National Data Protection Commission;

l) Institute of Mobility and Terrestrial Transport, I. P.;

m) Regulator of Waters and Waste;

n) Institute of Construction and Real estate, I. P.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Chapter IV

Workers in Public Roles

Article 8.

Control of the recruitment of workers

1-The organs and services covered by the objective scope defined in the

Article 3 of Law No 12-A/2008 of February 27 shall not be allowed to proceed to the opening of

concursal procedures with a view to the constitution of legal employment relationships

public for indefinite, determined or determinable time, for general career or

special and careers that have not yet been the subject of extinction, of review or of

subsistence decision, intended for candidates who do not possess a legal relationship

of public employment by indefinite time previously constituted, without prejudice to the

provisions of the following number.

2-In exceptional situations, duly substantiated, the members of the Government

responsible for the areas of finance and the Public Administration can, under and

pursuant to the provisions of Article 6 (6) and (6) of the Law No. 12-A/2008 of 27 of

February, authorize the opening of concursal procedures to which the number is referred

previous, fixing, on a case by case, the maximum number of workers to be recruited.

3-The provisions of paragraph 1 shall not apply to the concursal procedures which, at the date of entry

in force of this Law, have already been the subject of assent in the terms and for

the effects of the provisions of Article 6 (6) and (6) of the Law No. 12-A/2008 of 27 of

February.

4-The instruments necessary for the application of the provisions of this Article, including the

terms and elements that must integrate applications for exceptional permission to which if

refers to paragraph 2, are approved by dispatch of the members of the Government to which the

same number.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

5-All competent bodies and services for the conduct of inspection actions and

audit shall, in the context of the actions that they come to perform in the organs and services

covered by the provisions of this Article, proceed to the identification of situations

liable to constitute infringement of the provisions of this article and to communicate them to the

members of the Government referred to in paragraph 2.

6-Without prejudice to the full production of its effects during the time they have

running, the hiring and appointments of workers made in the

sequence of concursal procedures carried out in violation of the provisions of the present

article are null and void and make incurring their authors in civil, financial and

discipline.

7-For the purpose of the financial liability to which the number is concerned

previous consider, in particular, all payments made to the

workers appointed and hired in violation of the provisions of this Article

as a consequence of this violation and, as such, improper payments.

8-The provisions of this Article shall have exceptional character and shall prevail over all

legal, general or special provisions, contrary.

Article 9.

Monitoring of recruitment of workers in regional administrations and

autarchs

1-A The application of the provisions of the previous article to the organs and services of administrations

regional and local authorities carry out the necessary adaptations, specifically in the

regards the administrative powers of the corresponding bodies of

own government.

2-In the case of local authorities, exceptional recruitment depends on the verification of the

following cumulative requirements:

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

a) Demonstration of the existence of relevant public interest in recruitment,

weighted the possible deficiency of human resources in the sector of activity to

which is intended for recruitment as well as the overall evolution of resources

humans from the municipality or freguesia in which the service integrates;

b) Impossibility of occupancy of the jobs concerned under the terms

provided for in Article 6 (6) of the Article 6 of the Law No 12-A/2008 of February 27,

or by recourse to staff placed in special mobility situation or the

other mobility instruments.

3-A The authorization provided for in paragraph 2 of the preceding article competes in local authorities,

as the case may be, to the entities referred to in Article 3 (2) of the Decree Law

n ° 209/2009 of September 3 and depends on the favourable prior opinion of the entities to

which refers to Article 2 (2) of the same decree-law, as the case may be.

4-Local authorities inform the members of the Government responsible for the areas of the

Finance and the Public Administration of the intention to proceed to the opening of the

concursal procedure for the recruitment of workers referred to in paragraph 2 of the

previous article, with a minimum advance of 45 days in the face of respective publicitation,

indicating the statement of reasons relating to the verification of the requirements set out in paragraphs a)

and b) of paragraph 2.

5-Should the members of the Government responsible for the areas of finance and the Administration

Public consider not to have been demonstrated compliance with the requirements set out

in paragraph 2, they communicate to the authorities concerned, justitionably, their opinion

discordant in the face of the communicated intention, within 30 days of receipt of the

information to which the previous number is referred.

6-Existing communication of the dissenting opinion to which the preceding paragraph is concerned, the

authorities who decide to proceed with the publicitation of the concursal procedure for

recruitment of workers communicates to the members of the responsible government

by the areas of finance and the Public Administration such a decision.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

7-A advertised the concursal procedure in the situation provided for in the preceding paragraph

implies retention, in the transfers of the general budget of the state to the municipality in

cause, of an amount identical to the budgeted for the recruitment whose process was

started, which will only subsequently be transferred if it comes to be verified that the

autarchy respected the legal limit of indebtedness.

8-Without prejudice to the application, with due adaptations, of the provisions of paragraphs 5, 6 and 7 of the

previous article, are equally void the hiring and appointments of workers

performed following the concursal procedures carried out in violation of the

provisions of paragraph 4.

9-Local authorities refer monthly to the Directorate General of Local Authorities,

through the Integrated Information System of the Local Administration, the information

provided for in Article 50 (5) of Law No 2/2007 of January 15.

10-In the event of a failure to comply with the duty of information provided for in the preceding paragraph, it is

applicable the provisions of Article 50 (7) of Law No 2/2007 of January 15.

11-The provisions of this Article shall have exceptional character and shall prevail over all

legal, general or special provisions, contrary.

Chapter V

Holders of political office, public managers and equated persons

Article 10.

Reduction of the maturity of holders of political office

1-The net monthly salary of political officeholders is reduced to title

exceptional in 5%.

2-For the purpose of the provisions of this Law, they are holders of political office:

a) The President of the Republic;

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

b) The President of the Assembly of the Republic;

c) The Prime Minister;

d) The Members of the Assembly of the Republic;

e) The members of the Government;

f) The representatives of the Republic in the Autonomous Regions;

g) Deputies to the Regional Legislative Assemblies;

h) The members of the regional governments;

i) The Governor and vice-governor civil;

j) The president and full-time councillor of the municipal chambers.

Article 11.

Reduction of salaries of public and equied managers

1-A fixed monthly gross remuneration of executive and non-executive public managers,

including those belonging to the local and regional public sector, and of the equated to

public managers, is reduced to exceptional title in 5%.

2-For the purposes of this article, they consider themselves to be equipped with public managers the

members of the governing boards or administration of public institutes,

including those of special arrangements, with the exception of those whose status determines that the

remuneration for its members is established by reference to remuneration

established for the post of Director-General.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

Chapter VI

Local Authorities and Autonomous Regions

Article 12.

Reduction of transfers to Local Authorities

Under Article 88 of the budget framework Act passed by the

Law No. 91/2001, republished by Law No. 48/2004, of August 24, is reduced in

€ 100000000 the transfers of the State Budget (OE) to local authorities.

Article 13.

Reduction of transfers to Autonomous Regions

Under Article 88 of the budget framework Act passed by the

Law No. 91/2001, republished by Law No. 48/2004 of August 24, is reduced by:

a) € 2500000 the transfers of the State Budget to the Autonomous Region

of the Azores;

b) € 2500000 the transfers of the State Budget to the Autonomous Region of the

Wood.

Article 14.

Limits of indebtedness of Local Authorities

1-Under Article 87 of the Budget Framework Act, adopted by the

Law No. 91/2001, Republicated by Law No. 48/2004 of August 24, local authorities

cannot agree to contractually contractually new loans, including all forms of

debt, which entail an increase in their net borrowing.

2-The provisions of the preceding paragraph shall be without prejudice to that provided for in Article 39 (5 a) of the Article 39.

Law No. 2/2007 of January 15 and in the c ) of Article 40 of Law No 3-B/2010 of 28

of April.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

3-Can be excepted from the provisions of paragraph 1 other loans and amortizations, the

authorising by dispatch of the member of the Government responsible for the area of finance, in

exceptional situations duly substantiated.

Article 15.

Failure to default on borrowing limits

Under Article 92 (4) of the Budget Framework Act passed by the Law

n. 91/2001, republished by Law No. 48/2004 of August 24, the non-compliance of the

borrowing limits set out in the preceding Article and Article 83 (1) of the

Law No. 3-B/2010 of April 28 determines the reduction, in the proportion of the default,

of the transfers to be made.

Article 16.

Amendment to the maps of Law No 3-B/2010 of April 28

The amendments arising out of this Law are contained in the XVIII and XIX maps annexed to the

present law, of which they form an integral part, and which replace the corresponding maps with

Referring to Article 1 of Law No 3-B/2010 of April 28.

Chapter VII

Final provisions

Article 17.

Entry into force

1-A This Law shall come into force on the day following that of its publication, unless the provisions of

following numbers.

CHAIR OF THE COUNCIL OF MINISTERS

Proposal for Law No. 26 /XI/1.

2-The amendments made by this Law to the VAT Code and the Decree-Law

n. 347/85 of August 23 come into force on July 1, 2010.

3-In the case of transmissions of goods and benefits of services of continued character

resulting from contracts that give way to successive payments, the changes

introduced in this Act referred to in the preceding paragraph shall only apply to

operations carried out from the date laid down therein, defeating, to this effect, the

provisions of Article 18 (9) of the VAT Code.

4-The provisions of Articles 10 and 11 shall produce effect from June 1, 2010.

Seen and approved in Council of Ministers of May 20, 2010

The Prime Minister

The Minister of the Presidency

The Minister of Parliamentary Affairs