Source: DCI, 23/06/2009

SAO PAULO - The next stop in the discussion on the tax substitution regime should be at the National Council for Farm Policy (Confaz). The initiative is not yet on paper, but it is defended by secretaries of state and businessmen. “Creating national protocols interests us”, says the Finance Secretary of Pará, José Raimundo Trindade. The São Paulo State Treasury also supports the idea and suggests as an example the model of a cooperation protocol signed with the government of Minas Gerais.

According to the term agreed between the Tucan governors at the beginning of the month, all products within the segments included in the program, manufactured in São Paulo and sold in Minas, and vice versa, will pay ICMS at source. “It must be interesting that the same measure is adopted nationally”, says Guilherme Rodrigues Silva, assistant coordinator of tax administration at the São Paulo State Finance Department.

The idea of ​​standardizing the practice of tax substitution - which, as an exception, became a rule extended by the states - is also on the agenda of the São Paulo industry. “Tax substitution is a reality,” admits Hélcio Honda, the head of the Legal Department of the Federation of Industries of São Paulo (Fiesp). "What we can do is propose advances and improvements", he adds.

The movement of entrepreneurs, however, is in the sense of being able to change the new reality of tax collection and make it more favorable. One of the main criticisms of the regime is the number, considered large, of margin and added value (MVA) created. “Civil construction, for example, has more than 120 products included in the tax substitution regime and more than 120 MVAs. We think it is possible to centralize in less margin percentages ”, explains Honda. Today, Fiesp promotes a seminar on the subject, presenting the view that the regime represented an increase in the tax burden - an argument countered by Rodrigues Silva: “This is impossible”.

Under the substitution system, ICMS is charged at the origin of production, in order to avoid tax evasion throughout the chain. This system gained ground with the absence of tax reform. “Taking a long time to enter the Value Added Tax (VAT), the states are expanding the substitution, which became the rule as an exception”, says José Valério Medeiros, tax lawyer at Gasparino, Fabro, Roman and Sachet Advocacia. “The ICMS calculation system itself is being distorted”, he adds.

According to a survey carried out by Lacerda & Lacerda Advogados, Minas Gerais is one of the states that most expanded the tax substitution regime, in all 42 segments are in the regime. In Paraná, that number is 29 and in Rio Grande do Sul, 28 segments pay tribute by the same system. “Many companies from Rio Grande do Sul are going to Santa Catarina, where they have almost no segment under this tax regime,” says tax attorney Nelson Lacerda.

"This is the new fiscal war, because businessmen are going to seek states that do not apply this rule", he stresses. The lawyer goes further. For him, tax reform makes tax substitution unfeasible. “The Congress intends to vote on VAT, where each one pays in its stage the value that it added, this is exactly the reverse that the substitution foresees”, polemizes. According to Lacerda, while there is a rapid increase in the expansion of tax substitution, another discussion that emerges strongly is the revision of the assumed rates.

In the case of São Paulo, the deputy coordinator of the tax administration of the State Treasury says that the applied system was designed to bring the added value to the maximum of the price practiced in the sale to the taxpayer. “The replacement we have adopted has a very high technical rigor. We applied value-added research so detailed that it was done by product, ”says Rodrigues Silva. In addition, it was up to the productive sector to present a survey on the margin and a monitoring forum was set up with businesspeople.

The future of substitution in the face of tax reform is uncertain. For Rodrigues Silva, there is no way to anticipate what will happen, because the proposal that will come out of Congress is not known. "We know that the current proposal brings losses to the State," he says. He admits, however, that the importance of reform comes from two points: the need to unify the ICMS legislation and simplify the rules.

But while there is no reform or national protocol, some states speak of including meat in the tax substitution to at least maintain the collection.