Judicial system considered the main obstacle for companies in Portugal

In 2021, the judicial system was once again identified by companies as the biggest obstacle to their activity.

The overall framework regulation costs indicator in Portugal, which aggregates nine costs domains, recorded a value of 3.09 in 2021, on a scale of 1 to 5, according to data released by Statistics Portugal (INE). Last year, the judicial system was once again identified as the main obstacle to business activity, despite being the only domain to record a decrease between 2017 and 2021.

At stake is an INE survey of over 5,900 non-financial companies, aimed at analysing the framework regulation costs of companies, which is calculated based on results weighted by the turnover of companies and the degree of importance attributed by them in nine areas: judicial system, tax system, administrative burden, human resources, financing, network industries, barriers to internationalisation, licensing and start of activity.

According to INE,  the framework regulation costs correspond to “negative effects arising from rules, procedures, actions and/or omissions that hinder the activity of companies and that are not attributable to the investor, his business or his organisation.”

Last year, this indicador stood at 3.09, higher than in 2017 (3.05) and 2014 (3.04), and, in this regard, small and medium sized companies continued to present the highest overall framework regulation costs indicator, 3.15 (+0.6 than in 2017).

Among the nine domains analysed, in 2021 the judicial system was once again identified by companies as the biggest obstacle to their activity, with an indicator of context costs of 3.61, “despite being the only domain to register a decrease between 2017 and 2021 (-0.06),” INE points out.

In an analysis of the various components of the judicial system, tax disputes continue to represent more obstacles for companies (3.74) than commercial and labour disputes (3.61 and 3.49, respectively). “Regarding the characteristics of the cases, the biggest obstacle continued to be the length of court proceedings, considered as a high or very high obstacle for the activity of 51.7% of the companies,” it reads.

Licensing is the second greatest obstacle to business activity, with a framework regulation costs indicator of 3.47, followed by the tax system, with 3.27. In contrast, financing (2.62), network industries (2.76) and barriers to internationalisation (2.76) are pointed out by companies as the lowest obstacles to their activity. However, human resources and network industries domains, presented the largest increases in this indicator between 2017 and 2021 (+0.17).