Portugal announces tax reduction measures to spur economic growth

The Portuguese government announced on Thursday tax reduction measures to create more jobs and revive the country's flagging economy.

Portuguese Finance Minister Vitor Gaspar told a news conference that the government will reduce taxation by 20 percent for those companies with investment of up to 5 million euros (about 6.5 million U.S. dollars).

To foster the development of the medium- and small-sized companies, the government plans to lower their income tax rate from the current 25 percent to 7.5 percent, he said.

"The time is right for investment," Gaspar said, adding that the measures are designed to reign in unemployment, which he said is "the greatest priority of the Portuguese government and of Europe as a whole."

The finance minister also expected that Portugal's economy will see a slow recovery over the course of this year.

According to the latest figure, Portugal's economy contract 3.9 percent in the first quarter of this year and its unemployment stood at a record high of 17.7 percent.

Under a 78-billion-euro (about 101 billion U.S. dollars) bailout agreement with the troika in May 2011 the Portuguese government has been implementing a harsh austerity policy which has been blamed for its deepening recession and triggered widespread protest across the country in recent months.