DREM updates the time series of Tax Revenue Statistics for 2023

The Regional Directorate of Statistics of Madeira has recently updated the time series data on “Tax Revenue Statistics” covering the period from 2006 to 2023. It is important to note that the information for the years 2022 and 2023 is still provisional and preliminary, respectively.

This time series was compiled by Statistics Portugal (INE) as part of the national “Tax Revenue Statistics” compilation. The primary source of data is provided by the Regional Directorate of Budget and Treasury (DROT) to DREM for the production of quarterly and annual statistics for the Public Administration, as well as within the context of the Excessive Deficit Procedure. Additionally, the dataset is complemented with other data collected from the Central Administration by INE. The reference base for this information is the 2016 Portuguese National Accounts, adhering to the conceptual framework of the European System of Accounts (SEC-2010).

It is essential to emphasize that these data specifically pertain to taxes that constitute revenue for the Regional Government of Madeira. The values are expressed in national accounting terms rather than public accounting terms. Consequently, the figures published by DREM and those by DROT will reveal divergences for certain taxes. These discrepancies are justified by specific adjustments made by Statistics Portugal during the transition from public accounting to national accounting.

It is important to recognize that the information provided today does not allow for the calculation of the overall “tax burden”, which represents the sum of all effective taxes and social contributions levied on taxpayers domiciled in the Autonomous Region of Madeira. This analysis is limited to the Regional Government of Madeira while there are taxes (and social contributions) paid by residents of the Autonomous Region of Madeira that constitute revenue for both the Central Government and the Local Government.

In 2023, the tax revenue in the Region experienced significant growth, increasing by 18.9%

According to preliminary data for 2023, the total tax revenue in national accounting terms amounted to 1,204.8 million euros, increasing by 18.9% compared to the previous year.

In 2023, the Personal Income Tax (IRS) in the Autonomous Region of Madeira amounted to approximately 271.1 million euros, marking an increase of 4.7% compared to the previous year. This figure constituted 55.6% of the total direct taxes, a decrease from 71.0% in the preceding year. Most components of the IRS contributed to this increase, with the notable exception of withholdings on dependent labour income, which declined by 4.2% due to tax relief measures that resulted in lower withholding and increased disposable income. However, economic growth in the Region, as estimated by the Regional Indicator of Economic Activity (RIEA), led to an increase in employment levels (up 4.7%, according to the Labour Force Survey) and average gross earnings per worker (up 6.5%). These factors collectively influenced the IRS dynamics. According to data from the Tax and Customs Authority, significant increases were observed in revenue from business and professional incomes (up 5.1%), rental incomes (up 14.2%), and other capital incomes (up 20.9%).

In 2023, the revenue from the Corporate Income Tax (IRC) in the region reached 215.3 million euros, marking a substantial 106.3% increase compared to 2022. This surge can be attributed, on one hand, to the favourable economic situation experienced by the region in 2023, and on the other hand, to the inherent characteristics of this tax—namely, its strong irregularity and unpredictability.

Breaking down the components, it is observed that the boost in IRC revenue resulted from the collection notes, which represent regularizations within the scope of the International Business Centre of Madeira, self-assessments, which are payments made following the submission of the IRC declaration (Model 22) and advance payments, which depend on the IRC paid in the previous year.

Over the period from 2006 to 2023, the Value Added Tax (VAT) consistently stood out as the tax generating the highest revenue for the Regional Government. In 2023, VAT constituted 76.7% of the indirect taxes (76.0% in 2022), amounting to 549.9 million euros. Notably, the VAT related to the Autonomous Region of Madeira increased by 11.6% in 2023, reflecting the overall economic growth in the country. It’s important to note that the allocation of VAT to the region operates on a per capita basis.

In the remaining taxes, particular attention should be given to the tax on oil and energy products (ISP), which generated 40.4 million euros in revenue in 2023. This represents a 5.6% decrease compared to the preceding year. The decline can be attributed to the Regional Government’s management of tax rates for this levy, aimed at offsetting fluctuations in fuel prices.

On the other hand, the tobacco tax (IT) amounted to 42.0 million euros, showing a substantial 14.2% growth. Meanwhile, the stamp duty (IS) reached 33.8 million euros in 2023, with its revenue increasing by 2.6% compared to the previous year.

Regarding the alcohol and alcoholic beverages tax (IABA), it hovered around 10.0 million euros in the reference year, marking a 1.6% increase over the preceding year. In contrast, the vehicle tax (ISV) experienced a significant 32.8% increase from 2022, reaching 7.3 million euros in 2023. 

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