Price debates tax substitution with businessmen
Author: Milton Paes
Source: DCI - São Paulo / SP - OPINION - 26/11/2009
CAMPINAS - Tax substitution is a subject that has been increasingly attracting the attention of businessmen and executives from various sectors, mainly from São Paulo. Yesterday, the matter was discussed at an event in Campinas, which raised issues such as the government of the State of São Paulo having adopted, since last year, the tax substitution mechanism, which consists of concentrating the collection of the Tax on Circulation of Goods and Services (ICMS) at the first exit, that is, in the industry or in the product importer.
Before, when the manufacturer sold his product to the distributor, he paid the ICMS, when the distributor sold to the retailer, he paid the tax, and the retailer sold to the final consumer, he also paid the ICMS. With the tax substitution, the manufacturer or the importer collects the ICMS from the entire production chain in advance and places it in the price of the product. The measure offers facilities to the tax authorities, such as reducing taxpayers to be inspected and anticipating payment of the tax, which can also generate relevant adjustments in the tax environment. For the state government, tax substitution is one of the great allies in combating tax evasion. By concentrating the collection of taxes at source, the São Paulo tax authorities make it easy to monitor the collection of the tax, essential | to the maintenance of public investments in priority areas, such as health, education, transport, security and infrastructure. Furthermore, it guarantees tax justice between companies, avoiding the unfair competition that some of them practice when they do not collect the tax properly.
The government of the State of São Paulo gives the manufacturers of products under the tax substitution regime 60 days outside the month for the collection of the tax. This means that, in some cases, the payment deadline can reach 90 days. This extended term was implemented precisely to neutralize any eventual impact of the substitution on the companies' cash flow. However, there are still many doubts regarding the identification of products and where they are classified, that is, operationalization.
Sectors
The first sectors to have to join the regime in 2008 were cosmetics, personal hygiene, cleaning, medicines, auto parts, animal feed, paper, batteries, lamps, food and construction. This year the list was expanded: sectors of bicycles, mattresses, tools, musical instruments, household items, toys, machines and apparatus, electrical materials and stationery. Now in June, the sectors of electronics, electronics and home appliances entered the regime.
To clarify all these doubts, PricewaterhouseCoopers promoted yesterday in Campinas the panel "Tax Replacement of ICMS-São Paulo". About 70 people, including accountants, administrators and people who work with taxes from large companies in the regions of Campinas, São José dos Campos, Sorocaba and Ribeirão Preto.
Price partner José Roberto da Costa says the objective is to explain the tax substitution system. “There are some aspects of a technical nature that can interfere both in price and in the taxpayers' own relationship. We tried to review the history of the legislation and raise these points for discussion. ”
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Price debates tax substitution with businessmen
Author: Milton Paes
Source: DCI, 26/11/2009
CAMPINAS - Tax substitution is a subject that has been increasingly attracting the attention of businessmen and executives from various sectors, mainly from São Paulo. Yesterday, the matter was discussed at an event in Campinas, which raised issues such as the government of the State of São Paulo having adopted, since last year, the tax substitution mechanism, which consists of concentrating the collection of the Tax on Circulation of Goods and Services (ICMS) at the first exit, that is, in the industry or in the product importer.
Before, when the manufacturer sold his product to the distributor, he paid the ICMS, when the distributor sold to the retailer, he paid the tax, and the retailer sold to the final consumer, he also paid the ICMS. With the tax substitution, the manufacturer or the importer collects the ICMS from the entire production chain in advance and places it in the price of the product. The measure offers facilities to the tax authorities, such as reducing taxpayers to be inspected and anticipating payment of the tax, which can also generate relevant adjustments in the tax environment. For the state government, tax substitution is one of the great allies in combating tax evasion. By concentrating the collection of taxes at source, the São Paulo tax authorities make it easy to monitor the collection of the tax, essential | to the maintenance of public investments in priority areas, such as health, education, transport, security and infrastructure. Furthermore, it guarantees tax justice between companies, avoiding the unfair competition that some of them practice when they do not collect the tax properly.
The government of the State of São Paulo gives the manufacturers of products under the tax substitution regime 60 days outside the month for the collection of the tax. This means that, in some cases, the payment deadline can reach 90 days. This extended term was implemented precisely to neutralize any eventual impact of the substitution on the companies' cash flow. However, there are still many doubts regarding the identification of products and where they are classified, that is, operationalization.
Sectors
The first sectors to have to join the regime in 2008 were cosmetics, personal hygiene, cleaning, medicines, auto parts, animal feed, paper, batteries, lamps, food and construction. This year the list was expanded: sectors of bicycles, mattresses, tools, musical instruments, household items, toys, machines and apparatus, electrical materials and stationery. Now in June, the sectors of electronics, electronics and home appliances entered the regime.
To clarify all these doubts, PricewaterhouseCoopers promoted yesterday in Campinas the panel "Tax Replacement of ICMS-São Paulo". About 70 people, including accountants, administrators and people who work with taxes from large companies in the regions of Campinas, São José dos Campos, Sorocaba and Ribeirão Preto.
Price partner José Roberto da Costa says the objective is to explain the tax substitution system. “There are some aspects of a technical nature that can interfere both in price and in the taxpayers' own relationship. We tried to review the history of the legislation and raise these points for discussion. ”
