Topics such as environmental sustainability and work-life balance increasingly motivate a redefinition of the role of companies in society, encouraging them to gradually develop a logic of sustained and long-term value creation. To respond to this challenge, it is on the agenda for companies to adopt ESG policies (Environmental, Social and Governance), in a movement aligned with the initiatives that have been carried out in this matter over the last few years by various supranational organizations, such as the UN, the OECD, the EU and the World Economic Forum, through the definition of good ESG practices and metrics to evaluate its implementation.
Furthermore, the adoption and compliance with ESG policies is increasingly an aspect taken into account by institutional investors when defining their portfolios, and there are also rating that already carry out classifications of entities based on the adoption of these policies.
Naturally, taxation is a basic element in the definition of any ESG strategy by a company, either as a useful instrument for introducing these policies, or because of the requirements made in this area in relation to responsible fiscal policies.
Within the scope of the first dimension, it should be noted that the Portuguese tax system establishes multiple tax regimes and benefits that are potentially useful for defining ESG policies, namely the regime of social utility achievements for IRC purposes, the RFAI, as well as the benefits tax relating to properties allocated to the production of renewable energies and/or for the creation of “car/bike-sharing” systems.
Regarding the second dimension, it is expected that the ESG will contribute to an increase in pressure and/or legal obligations on companies to increase the degree of transparency regarding their tax situation before the tax authorities and their stakeholdersalong with the possible creation of new taxes and/or tax incentives aimed at extra-fiscal purposes, similar to what is already starting to happen at European level in the context of carbon taxation and inventives for green taxation.
This movement is, moreover, in line with those that have been the dominant initiatives around taxation over the last decade, around the introduction of mechanisms to prevent abusive tax practices and the reinforcement of the economic substance of business structures.
More than being seen as a potential factor in increasing the cost of compliancethis expected increase in documentation and reporting obligations in tax matters arising from ESG policies should be seen as an opportunity to analyze investment structures adopted so far and their economic substance, in order to ensure their alignment with the strategic values and objectives of the company and, as well, reinforce such investment structures, contributing to the mitigation of tax risks.
This is, therefore, a reality that companies must be aware of, bearing in mind the remarkable relevance of taxation in defining the ESG policies to be adopted.
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