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Advisor(s)
Abstract(s)
This article aims to assess how fiscal and financial incentives and government support
conditioned the profitability of Portuguese SMEs between 2010 and 2019. The high tax and financial
burdens on SMEs have consequences for sustainability and business development. Thus, the study
analyzes different incentives provided by the Portuguese government to ease this burden and
improve business profitability. The study uses panel data with fixed effects using five different
sources of information from five internal tax grant types, three different European Union program
financial subventions, and three national budget-specific expenses. The results obtained suggest that
tax incentives influence the profitability of SMEs; however, government incentives do not have any
impact. The QREN (financial) incentives positively decide the ROA and negatively impact the ROE,
contributing to sustainable performance. Portugal 2020 incentives have a weak effect on the first
years, improving in the following years. However, the incentive related to R&D is not relevant. This
work aims to contribute to decision making for managers, shareholders, and government entities,
allowing them to choose those measures that could increase the company’s added value, and for
governments, as a tool to select incentives that will most benefit SMEs” profitability. This work
identifies the key incentives that impact companies’ profitability.
Description
Keywords
tax incentives grants financial incentives profitability government incentives ROA SME´s