States evaluate whether to retain at least 10% of the tax incentives granted to companies. Convention No. 31, of the National Council for Farm Policy (Confaz), authorizes them to adopt the measure so that the percentage is allocated to funds related to “development and fiscal balance of the States”. So far, at least four state governments say they intend to adhere to the practice: Rio de Janeiro, Rio Grande do Sul, Alagoas and Santa Catarina. In Santa Catarina, the retention is estimated to contribute to an increase of R $ 150 million in the State's annual revenue. According to the Finance Secretary, Antônio Gavazzoni, however, the agreement will only be useful if all States apply the measure at the same time. "If a state is left out, it will invalidate the agreement because the reduction would mean competition between states and a new fiscal war would come," he says.
The request was made by the Federal Council of OAB and granted by Dias Toffoli.
Decision cites Sebrae study on the impact of the tax change.
The Minister of Supreme Court (STF) Toffoli days granted on Wednesday (17) an injunction suspending the change in the rules for the collection of ICMS in electronic commerce. The request was made by the Federal Council of the Brazilian Bar Association (OAB), which claimed that the change in tax collection for Simples Nacional companies is unconstitutional.
The suspension is valid until the end of the trial. The action will still be judged by the STF plenary.
He is on the Constitution, Justice and Citizenship Commission (CCJ), awaiting the appointment of rapporteur, the Proposed Amendment to the Constitution (PEC) 154/2015, by Walter Pinheiro (PT-BA), which allocates part of what is collected through the repatriation of resources for the creation of the National Fund for Regional Development (FNDR). The proposal also creates a compensatory fund for the states, with a duration of eight years, aiming at the unification of the rates of the Tax on Circulation of Goods and Services (ICMS).
The government seeks through the Special Regime for Foreign Exchange and Tax Regularization, to be created after the approval of the Bill of Law of the Chamber (PLC) 186/2015, make possible sources of funds with the application of income tax and fine on assets and assets of lawful origin kept abroad that are regularized with the IRS.
According to PEC 154/2015, the Regional Development Fund should receive, from this and other sources, at least R $ 3 billion per year, during the first five years. To the ICMS convergence aid fund, R $ 1,5 billion should be allocated annually in its eight years of effectiveness. Still according to the proposal, the FNDR should prioritize the Northeast, Midwest and North regions, with the Northeast receiving 50% of the resources.
The ICMS convergence aid fund will allocate its resources in proportion to the losses recorded in each state. If the eight-year term is over and there are still losses, the fund should be extended for another two years.
Pinheiro recalls that the Supreme Federal Court (STF) can vote at any time on the Súmula Vinculante 69, which makes all tax incentives granted since the 1990s unconstitutional, such as those dealing with the ICMS.
- If this occurs, there will be unpredictable economic and social consequences for several states, such as the cancellation of scheduled investments, the closure of production units and the increase in unemployment - he warns.
The senator believes that this is a fundamental complementary measure related to the reform of the ICMS interstate tax system, which is already being debated in the Senate through the PRS 1/2013.
The plenary of the Chamber of Deputies rejected, by 235 votes to 200, an amendment by Deputy Alex Canziani (PTB-PR) to Provisional Measure 685/15 that intended to prevent the Union from collecting federal taxes on amounts that companies achieved with ICMS tax waivers .
The amendment would be valid even if the incentive did not have the unanimous support of the National Council for Farm Policy (Confaz). Unilateral incentives without unanimous approval are being considered unconstitutional by the Federal Supreme Court (STF).
The deputies have already approved the bill for the conversion of the rapporteur, Senator Tasso Jereissati (PSDB-CE), to the matter, which allows the taxpayer to settle tax debts, due by June 30, 2015, with the Federal Revenue Service or the Attorney General's Office National Treasury (PGFN) if they are under administrative or judicial discussion.
To join the Tax Litigation Reduction Program (Prorelit), instituted by the measure, the taxpayer must pay part in cash and the other part can be deducted with credits generated by the use of tax losses and the negative calculation base of Social Contribution on Net Income (CSLL).
At the moment, the PDT is in the spotlight, requesting the approval of the amendment of deputy Félix Mendonça Júnior (PDT-BA) to allow companies to deduct tax losses and other legal deductions up to 100% of the income tax calculation base and of the CSLL.
New President of the ETCO Advisory Council talks about smuggling, evasion, fiscal war and the country's bad time
Tax attorney Everardo Maciel is the new chairman of the Advisory Board of ETCO-Brazilian Institute of Ethics in Competition. He took up the post on September 1, replacing Ambassador Marcílio Marques Moreira, who has held the position since 2006. The Advisory Board is made up of prominent names from various segments of society, such as lawyers, diplomats, politicians and businessmen, and has the role of guiding the direction of the Institute.
Federal Revenue Secretary under President Fernando Henrique Cardoso and currently working as a professor and consultant, Everardo has been on the Advisory Council since it was created in 2004. “It is a huge responsibility to succeed someone with the intellectual value and importance of Ambassador Marcílio Marques Moreira, ”he says.
Below are excerpts from the interview he gave ETCO in Action.
How did you receive the mission to chair the ETCO Advisory Council?
Everardo Maciel: ETCO is a rare initiative by the business community to develop fair competition in Brazil. I have been a member of the Advisory Board since the foundation and have followed all the Institute's initiatives. My intention is to continue the work that Ambassador Marcílio has been doing brilliantly. I just want to increase the internal discussion to form or strengthen ETCO's convictions regarding the themes in which it operates. What is our view on combating smuggling? How should the Institute position itself in relation to the fiscal war? I intend to deepen the understanding of these issues within the Advisory Council, including contributions from outside experts, to help guide the direction of the Institute.
What is your view on the current moment?
Everardo Maciel: Brazil is experiencing a deep crisis, which has an important economic dimension, inserted, however, in a bigger crisis, that of values. This situation has a negative impact on the materials that are the subject of ETCO. Tax evasion, piracy and smuggling, for example, tend to increase, due to the recession. Brazil is in danger of falling back on the ETCO's interest topics.
Support for anti-corruption movements is one of ETCO's themes. How do you see the new laws that were created to combat this evil?
Everardo Maciel: I have many questions. In Brazil, there is a tendency to create laws of occasion. A problem arises, a new law is enacted, the effectiveness of which is never assessed. It is necessary to assess whether this new legislation is in fact able to reduce corruption. There is a risk of not achieving the objective and still causing uncertainties that harm the economy. The name 'Anticorruption Law' also makes this type of reflection difficult. If you ask questions, you risk being labeled in favor of corruption. We need to discuss this matter further in the Advisory Council, in order to reach a conclusion.
Why can't Brazil reduce smuggling?
Everardo Maciel: Because insisting only on the path of repression does not work. Today, I understand that there is no way to tackle smuggling without a powerful international cooperation program. I am not talking about just signing agreements of intent, shaking hands and saying that we are going to act together, but about more consistent work, which takes into account mutual interests, acts on the reasons across the border.
Are you referring to Paraguay?
Everardo Maciel: Namely, Paraguay. We will never resolve smuggling without a program that considers Paraguay's development. There are similarities to the migration crisis that we are seeing in Europe. There is no use trying to close the borders, build walls, put an electric fence. People at risk of being hit by bombs or starving to death in their countries will do anything to break through the blockade. Anyone who believes that smuggling can be solved only through repression should spend a few days on the Brazilian border with Paraguay, seeing the number of small planes that fly over the region.
Has Brazil tried to follow this path?
Everardo Maciel: When I was Secretary of Revenue, President Fernando Henrique charged me with negotiating a broad agreement with Paraguay. In a few months, we signed an agreement. Unfortunately, diplomacy follows a very slow pace and the agreement only came to be ratified by Congress already under President Lula, when circumstances were different. The Paraguayan Senate ended up rejecting the agreement.
How to reduce tax evasion?
Everardo Maciel: The solution requires simple rules and tax burden at reasonable levels. From the point of view of technology, Brazil already has one of the most modern collection systems in the world. I am proud to have participated, in ETCO, in the implementation of electronic invoices. One of our biggest problems today is not the evasion of the grocery store, but that practiced by large economic groups through illicit avoidance, abusive tax planning. Billions of reais flow through these mechanisms that the country continues to neglect.
Will we be able to carry out tax reform?
Everardo Maciel: We will not have tax reform. People dream of creating another tax system, but there are no paradigms to follow. If you put together the top ten Brazilian tax experts and ask them to create a new system, in the end we will have at least eleven different models. Tax systems are cultural models, which evolve continuously. In Brazil, there is the illusion of reformism, on the assumption that reforms are a panacea for all ills. Tax reform is not an event, it is a process.
How to solve the fiscal war?
Everardo Maciel: Fiscal war is harmful competition, violation of law. We cannot, however, confuse it with lawful tax competition, which has existed in the world since taxes were created. Brazil needs to decide to what extent it accepts tax competition. Today, we live in chaos. There are no laws, and the ones that do exist do not contain sanctions, which is the same as not existing. Unfortunately, I believe that we are far from resolving this issue, because we have not even taken the first step, which is to understand the problem. It is like the dilemma of Alice [from the book Alice in Wonderland], who asks the cat to help her find the way out, but cannot say where she wants to go. And the cat says: "In that case, it doesn't matter which way". To resolve the fiscal war, we must first be clear about what our objectives are.
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.
Tax incentives involving the ICMS are the cause of tax war between states, legal challenges and legal uncertainty in the country's competitive environment. ETCO-Brazilian Institute of Ethics in Competition supports the drafting of laws and actions to solve the problem. To clarify those interested and give more visibility to the topic, the Institute created a folder with the main points under discussion and their positioning.
The newsletter is available in the publications area of the website or at the institute's headquarters. More information by phone (11) 3078-1716 or email to firstname.lastname@example.org
We use essential cookies to provide you with a better experience. Information about cookies is stored in your browser and performs functions such as recognizing you when you return to our website and helping our team understand which sections of the website you find most interesting and useful.
We use essential cookies to provide you with a better experience. Essential cookies must be enabled at all times so that we can save your preferences for cookie settings
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.