The result comes despite the country recording the third-largest score increase, and it suggests that, while some tax changes have improved the system’s design, Portugal still ranks among the least competitive tax regimes in the OECD, according to the latest Tax Foundation report.

Portugal’s score rose to 59.6 from 58.4, with only the Czech Republic and Iceland posting larger gains, ECO News reports.

Corporate tax reforms support improvement

The report, produced by the Tax Foundation with support from Portugal’s Instituto +Liberdade, attributed the improvement to a gradual reduction in the top combined corporate tax rate, including surtaxes, from 31.5% in 2024 to 30.5% in 2025 and 29.5% in 2026. It also pointed to an enhanced tax incentive for corporate capitalisation introduced in 2025.

Nevertheless, Portugal remained near the bottom of the corporate tax ranking, placing 34th. The report cited the relatively high top tax rate, surtaxes that restrict the use of loss carryforwards, and the complexity of tax incentives.

Portugal ranked 35th in the latter subcategory, although it secured 8th place for rules allowing companies to deduct investment costs.

Portugal’s performance across tax categories

In other categories, Portugal ranked 19th for personal income taxation, with the report highlighting a top personal income tax rate of 53%, including the solidarity surcharge, and the absence of a cap on social security contributions.

The country also placed 19th for property taxes, 21st for consumption taxes and 33rd for international tax rules.

The index uses 43 variables to assess the competitiveness and neutrality of tax systems, focusing on tax structure rather than the overall tax burden paid by households and businesses, ECO News reports.

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