Source: Cidade Biz - SP, 06/10/2008

The tax reform is expected to be approved by the Chamber of Deputies by the end of November, in the opinion of Bernard Appy, extraordinary secretary for economic-fiscal reforms at the Ministry of Finance. The forecast is based on the dialogue established between the government and the rapporteur on the matter, deputy Sandro Mabel (PR GO).

“Discussions have advanced, there are already several points of consensus, especially in relation to federal VAT (Value Added Tax). The perspective is to vote in the Special Tax Reform Commission and in the plenary of the Chamber of Deputies after the 2nd round of municipal elections, until the end of November ”, said Appy at Amcham-São Paulo.

This Monday he participated in the “Seminar on Taxation and Competitiveness - The impact of tax costs on economic efficiency”, promoted by the National Confederation of Services in partnership with the FGV-SP School of Law and with the support of Amcham and the Instituto de Competitive Ethics (ETCO).

According to Appy, tax reform is essential to increase the competitiveness of Brazilian products and services and increase the country's Gross Domestic Product in the long run. "According to a survey we carried out, with the reform, the annual GDP growth rate should be increased by 0,5 percentage point over the next 20 years".

The main advances, according to the secretary:

• Simplification of the system and reduction of accessory obligations paid by companies.
• Exemption of 6 percentage points from the payroll.
• Complete exemption from exports with an adequate compensation system for accumulated credits.
• Reduction of cumulative indirect taxes.
• Reduction of credit appropriation terms by the capital goods sector (today credits are paid between 12 and 48 months, which increases the financial cost of companies).
• End of the fiscal war.

The federal government's tax reform proposal, sent from Congress at the end of February, provides for the creation of federal VAT, composed of PIS (Social Integration Program), Cofins (Contribution to the Financing of Social Security), Cide (Intervention Contribution) in the Economic Domain) and education salary. And also the unification of IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income).

The project also creates the new ICMS (Tax on Circulation of Goods and Services) with unique legislation. “Today there are 27 laws. It is a scenario that has inhibited investments, such as legal uncertainty ”, emphasized Appy.

Defense of Amcham - The president of the taxation task force of Amcham, Roberto Pasqualin, who participated in the seminar, hopes that the rapporteur of the matter, Sandro Mabel, contemplates the reduction of the chances of incidence of VAT-F. According to him, it would not be healthy for the business environment in Brazil to extend the collection to several economic activities that were not previously taxed.

Amcham has also advocated the non-cumulative nature of VAT-F and ICMS. The objective is to promote the compensation of tax against tax, that is, the tax paid in the first purchase operation must generate credit at the time of sale and so on, without accumulation throughout the production process. "The content of non-cumulativity must be defined within the scope of the Federal Constitution," said Pasqualin.

With Amcham Agency