Author: Communication Advisory

Source: Secretaria da Fazenda - SP - NEWS - 23/07/2009

The governor of São Paulo, José Serra, and the governor of Rio Grande do Sul, Yeda Crusius, signed this term (23/7), in São Paulo, a term to expand the partnership between the states in the tax area, including 12 new sectors in the interstate tax substitution regime. The cooperation between the São Paulo and Rio Grande do Sul governments was signed by the governors in December 2007, initially covering four sectors: bedding; animal feed; components and accessories for self-propelled (self-propelled) and cosmetics, perfumery, toiletries and dressing table.

“This is an advance, a tax reform. It will eliminate borders between states, ”said Serra. For Governor Yeda Crusius, “the adopted two-way model will represent more efficiency”.

The tax substitution protocols were signed by the São Paulo Finance Secretary, Mauro Ricardo Costa, and the Rio Grande do Sul Deputy Finance Secretary, Leonardo Gaffrée Dias, for the following sectors: toys; household artifacts; bicycles; electronics, electronics and appliances; tools; musical instruments; electric materials; building materials, finishing, DIY or adornment; cleaning material; stationery; food products and hot drinks. Adjustments to the protocols signed in 2007 in the bedding and cosmetics, perfumery, personal care and toiletry sectors will also be signed, updating the value margins added to the price surveys.

The new protocols are "two-way", that is, they apply both to goods purchased by companies from São Paulo in Rio Grande do Sul and to those acquired by companies from the state of Rio Grande do Sul in São Paulo. Whoever sends goods to the other state will pay the ICMS for the benefit of that state, avoiding tax evasion in retail sales.

"In addition to combating tax evasion efficiently, tax substitution also represents a major step forward in increasing the efficiency of tax administration, with savings," said the secretary of São Paulo, Mauro Ricardo Costa. “The partnership with São Paulo is fundamental, a large part of the industries are here”, completed the assistant secretary from Rio Grande do Sul.

Under the tax substitution regime, the ICMS due at all stages of the chain is moved to the beginning, where there are fewer companies and the inspection becomes more agile, cheap and effective. The first agreements resulted in an increase of R $ 80 million in ICMS revenue per year in Rio Grande do Sul. The government of Rio Grande do Sul estimates that the expansion will generate additional tax revenue of approximately R $ 200 million per year, which will be added to the additional revenue already calculated in the sectors included in 2007, totaling an expectation of a potential increase of R $ 280 million a year. The Finance Secretariat of São Paulo estimates that the adoption of two-way protocols in the new sectors will enable an increase in the collection of ICMS for the State in the order of R $ 200 million per year.

23/07/2009

Communication Department of the Finance Secretariat