Source: Jornal do Comércio - RS - 30/08/2009

Since last year, the State government has been intensifying the use of tax substitution as a way of collecting the Tax on Circulation of Goods and Services (ICMS). In this system, a part of the chain on which the tax is levied is responsible for its collection, usually industry or wholesale. Thus, the collection is concentrated in a smaller number of taxpayers, which gives the Tax Authorities greater control over the collection, reducing tax evasion. At the end of July, the governor Yeda Crusius and the governor of São Paulo, José Serra, signed protocols including 12 more segments in a tax substitution agreement with implementation starting in September for the first three sectors: building material, electrical material and tools. The importance of São Paulo for this collection system is essential, because either the State is the headquarters of most industries, or it is the largest consumer market for articles produced in Rio Grande do Sul. With this agreement, the collection of State is expected to increase by approximately R $ 200 million. This increase results from the recovery of ICMS tax due due to the great pulverization of these chains when they reach the consumer. As in tax substitution the tax is paid in advance, there is a need to stipulate an added value margin, which is the reference price on which the ICMS is charged. This value is the average market price, the result of research done, in most cases, by specialized institutes. But, most importantly, as the market is agile and the price varies frequently, we have a long practice here in the State to review this margin whenever necessary, to ensure that tax substitution remains a way of promoting tax justice among taxpayers. our taxpayers. Proof of this is that most of the protocols signed in the last two years are in response to the demand of the segments included, interested in ensuring fair competition. If a more effective fight against tax evasion is ensured through tax substitution, taxpayers who act correctly are the first parties interested in making it happen. Thus, those who pay their taxes will not be harmed by those who do not. As an important instrument to combat tax evasion, tax substitution is yet another tool that the state government uses to ensure that the tax paid by the citizen reaches the public coffers so that it can return to society in the form of better services, more security , more education, more health, more infrastructure works, more qualification for civil servants.

State Secretary of Finance / RS