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Portugal cuts fuel taxes on inflation fears

ISP fuel tax to be cut as VAT reduction under consideration

Whilst Portugal still has only the second highest energy inflation rate in the Euro zone at 12% for January 2021, it has still brought forward a cut to the fuel tax, Imposto sobre os produtos petrolíferos e energéticos (ISP).  A similar VAT cut is still being considered but will need Parliamentary approval. Due to recent inconclusive election results, this will not be possible for some time.

The government says that there will be no net cost for the measure since VAT revenues on fuel sales have risen sharply with the increase in pump prices.

Many other EU states cutting VAT on fuel. You can receive our regular global VAT and GST news by signing up today!

ISP is charged on the following fuels:

  • Unleaded petrol
  • Petroleum
  • Marked petroleum
  • Diesel
  • Diesel for use as heating fuel
  • Marked diesel
  • Fuel oil with sulphur content up to 1 %
  • Fuel oil with sulphur content over 1%
  • Mineral oils
  • Methane and petroleum gases, including Liquefied Petroleum Gas (LPG)
  • Natural gas
  • Electricity.


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