Tag: Regional development

Starting in the legislature, the end of the Fiscal War is possible.

By Evandro Guimarães, President of ETCO

The parliamentary recess is approaching, but there is still an expectation that the Senate will vote this year on a bill that helps in the effort to end the fiscal war between states. Those who defend the approval recall that the new governors will be able to take office on January 1 with a new orientation, which can help a lot in the development of the country as a whole.

The expectation comes from November 4, when the Senate Economic Affairs Committee (CAE) approved the fifth substitute presented by Senator Luiz Henrique (PMDB-SC) to the original project of Senator Lúcia Vânia (PSDB-GO), PLS130 / 14. The substitute authorizes the National Council for Farm Policy (Confaz) to validate the tax incentives granted to States, even without unanimous decision, as required today.

Senator Luiz Henrique's substitute avoids the risk of unconstitutionality of the bill presented in April (PLS 130/2014), by Senator Lúcia Vânia (PSDB-GO) and predicts that an agreement for the validation can be signed with the support of two thirds of the federated units and one third of the federated units in each of the five regions of the country. The change in quorum applies only to the validation of tax incentives, forgiveness of tax credits arising from disputes between States and eventual reinstatement of benefits.

This approval is the initial step towards pacifying the issue of tax incentives through legislation. ETCO defends the immediate mobilization of parliamentarians for the end of the fiscal war, as the solution must be sought in Congress, where an agreement is possible, with concessions between the interested parties, as was the case in CAE.

The vote on PLS 130/14 can avoid the resolution of the fiscal war by the Federal Supreme Court (STF). The Supreme Court has already ruled in 29 Direct Unconstitutionality Actions (ADIs) that incentives granted without the consent of Confaz are unconstitutional and may place the Binding Summary Proposal 69 on the agenda. The text considers the ICMS tax incentives granted without prior unanimous approval to be unconstitutional. do Confaz. If the Binding Summary is edited, all the organs of the Judiciary and the direct and indirect public administration, at the federal, state and municipal levels, are obliged to adopt this consolidated STF orientation.

This situation - of a bill pending in the Senate and a binding summary that can be edited - causes legal uncertainty that results in paralysis of investments in the country. clear for future incentives, companies have left projects aside.

Shortly after approval by the CAE, the Confaz Coordinator, José Barroso Tostes Neto, stated that the agreement to vote on the substitute was possible because the government was willing to start discussions for the reform of the ICMS. The creation of Regional Development and Compensation Funds is essential to compensate for losses by States.

The path of the new federative pact is outlined and the first step has been taken. It remains to advance the approval of the text that legalizes the tax incentives created by States and the Federal District and, subsequently, the ICMS unification projects and the creation of funds, so that the instruments to stimulate development are all aligned.

Evandro Guimarães, CEO of ETCO
Evandro Guimarães, CEO of ETCO

 

 

Solution to the fiscal war

ETCO contributes to the search for an appropriate, transparent and negotiated solution to the issue of tax incentives related to the ICMS, a focus of legal uncertainty in the government and in the business environment.

REFERENCES

  • Fiscal War - Reflections on the Granting of Benefits Within the Scope of Icms, by Paulo de Barros Carvalho and Ives Gandra da Silva Martins. Editora Noeses, 2012.
    The so-called Fiscal War, especially the one referring to the ICMS, involves not only the friction between the States of the Federation, but also directly affects taxpayers who have benefited from tax incentives. In the book, the authors present two studies that reflect their understanding of the granting of tax exemptions, incentives and benefits under the ICMS, as contributions to the solution of the important and difficult issue of the Fiscal War.
  • Fiscal War - Reflections on the Granting of Benefits Within the Scope of Icms - 2nd Edition, by Paulo de Barros Carvalho and Ives Gandra da Silva Martins. Editora Noeses, 2014.
    The harmful and illegal competition that endangers the Brazilian Federation - the Fiscal War - especially the one referring to the ICMS, involves not only the friction between the States of the Federation, but also directly affects taxpayers who have benefited from tax incentives. In the book, the authors present two opinions that reflect their understanding of the granting of tax exemptions, incentives and benefits under the ICMS, as contributions to the solution of the important and difficult issue of the Fiscal War. In this second edition, the authors added two new texts and included the transcript of the entire content of the preliminary draft prepared by the Federal Senate Pact Commission.
  • The Icms Tax War - A Critical Analysis of Credit Disallowances, by Eduardo Rodrigues Marques Klaus. MP Editora, 2010.
    The author enters the study of the ICMS, delving into the principle of non-cumulativity. Then he brings his vision of tax benefits to the work. At this point, more than exposing the requirements related to their concession and identifying their species, Professor Klaus confronts these benefits with the financial ones, enriching his work.
  • Constitutional Changes to Icms, Fiscal War, Tax Competition and Improving the Business Environment In Brazil, by Fábio Roberto Corrêa Castilho. Editora Quartier Latin, 2013.
    The constitutional reforms of the ICMS profile, today at the center of the discussion of reforms in the national tax system, aim, above all, to end the fiscal war between States. In this work, we tried to show that such reforms underestimate illegality as the main cause of the harmfulness of the fiscal war, leading to the disregard of the alternative of creating a normally competitive ICMS environment. At the same time, due to their excessive complexity and scope and because they occupy the discussion agenda on taxation in Brazil, they hinder incremental institutional changes in the ICMS that could, in fact, improve the Brazilian business environment.
  • ICMS credits in the Fiscal War, by Luiz Rogério Sawaya Batista. Publisher Quartier Latin, 2011.
    This book deals with the fiscal war, with which the author obtained a master's degree in tax law from Universidade Presbiteriana Mackenzie. The matter is dealt with very proficiently in its various aspects, of which I want to dwell on just one point: the constitutionality of the challenge, by the state of destination, of credits that correspond to incentives granted unilaterally by another state, without the necessary approval by the Confaz. There are basically two positions in this field. For one, no state can challenge full credit (that is, 12% in the example given above) until the state law or decree that granted the incentive has been declared unconstitutional by the STF. For another, this challenge is perfectly possible without the need for a prior declaration of unconstitutionality, based on the provisions of art. 8 of complementary law No. 24, of January 10, 1975. In the state of São Paulo, there is a provision of state law that establishes this procedure - Alcides Jorge Costa.