Secret budget, provisional federation

The history of Brazil, as it is known, is marked by fantasies and omissions, such as the “Ipiranga cry”, the silence about the decisive role of Empress Leopoldina in independence and the libertarian movements of 1817 and 1824, the military coup euphemistically called “proclamation” of the Republic, the mythology surrounding Tiradentes, whose profile was produced in the likeness of Christ as portrayed by Renaissance painters, etc.

We also have a taste for the unfinished. Decree nº 1 of the Republic, signed by Marshal Deodoro da Fonseca, “head” of the provisional government, provisionally “proclaims” the Republic and the Federation, which, in my opinion, remain provisional. the art. 2 of Constitutional Amendment nº 32, of 2001, allowed the existence of permanent provisional measures, without even bothering dictionaries.

Raised on several occasions in the imperial period, the Federation of 1889 was an unfinished copy of what existed in the United States, in absolutely different circumstances: there, ascendant and contractual; here, descending and normative. It was yet another manifestation of our deep-rooted mutt complex, which uncritically worships ideas gestated abroad.

Since then, we have experienced a broken federalism, contrasting with the discourse of a federative pact that never existed.

Cooperative federalism, provided for in art. 23 of the Constitution, has been awaiting discipline since 1988. And nobody cares about that.

The Constitution says that ICMS is a selective tax, based on essentiality. A complementary law recognized, albeit belatedly, that fuels and lubricants are essential products and, therefore, cannot have a higher rate than the modal rate. Nobody questions the essentiality of those products. It is postulated, however, compensation to the States for a “loss” imposed by the Constitution.

Since the 1965 tax reform, the constitutionalization of income sharing has been added to the tax competence of the federative entities, under the pretext of confronting flagrant inter-regional inequalities. This objective, however, was never achieved, even because the sharing criteria are not consistent with it.

This federative disorder was aggravated by the “parliamentary amendments”, which, at first, were not very expressive in fiscal terms. Afterwards, they grew significantly and assumed an imposing character. culminated with the monster of the secret budget. They are the ostensible face of the waste of public money, of unvirtuous political co-optation and, not infrequently, of corruption.

Article: The precariousness of the rule of law

The Constitution proclaims, in its art. 1, that Brazil is a democratic state of law, which assumes the submission of all to the law and the popular will.

Stability and clarity are minimum requirements for law enforcement. This is not what you see in Brazil. Standards are changed frequently, often with deplorable technical quality. The interpretation given to the norms also changes continuously, without plausible justification.

Evidence of this normative degradation, to the detriment of legal certainty and the rule of law, abounds in the media. Constitutional amendments are approved on the spot. Judicial decisions of great relevance are taken in virtual plenary. I present below some examples of this degradation.

Constitutional Amendment No. 87, of 2015, which deals with the taxation of ICMS on non-face-to-face interstate transactions, establishes, in art. 2, that its effects would occur from 2015, while, in art. 3, fixed 2016. This primary error went completely unnoticed.

The Constitution provides that the taxation of fuels and lubricants by ICMS should, among other requirements, have a uniform rate throughout the national territory.

Complementary Law No. 192, of 2022, met the constitutional requirement of specification of those products for the establishment of the uniform rate, however it invaded the competence of the States to establish criteria for its establishment. That's not what the Constitution says. The States challenged that rule, including in the allegations that the uniform is not identical. That's not what the dictionary says.

A recent court decision established the non-levy of income tax on alimony received, using, among other reasons, that it would be a case of double taxation. It is not what is in the arts. 4 and 8 of Law No. 9.250, of 1995, which provides for the deductibility of alimony paid. On the contrary, a hypothesis of double non-taxation was generated. If a couple separates, the tax will not apply to who pays or who receives. An invitation to simulation, especially for the rich.

Since the institution of the ICM, in 1967, it was understood that that tax and the ICMS, its successor, were levied on interstate transactions, whether or not there was a transfer of ownership. A court decision in 2021 reformulated this understanding, considering the incidence without transfer of ownership unconstitutional. Have we spent more than half a century living with this unconstitutionality without anyone realizing it?


ETCO supports bill from the Finance Secretariat of SP that aims to improve the business environment

The São Paulo tax authorities want to establish a new relationship with the ICMS taxpayers, more focused on dialogue than on repression. The idea is to reduce the assessments, which reach values close to R $ 30 billion per year in the State of SÃ £ o Paulo.

To try to achieve this goal, it created a new model in which it segmented taxpayers through “behavioral” notes in order to identify those who offer the least risk to the state coffers.

The classification considers three criteria: the payment of the tax based on the declared amount, the issuance of invoices compatible with the amounts declared to the tax authorities and relationships with suppliers that meet the same criteria.

The best positioned in the ranking will be treated differently. Among them, the receipt of accumulated ICMS credits without the need for financial guarantee, opening a dialogue channel with the tax authorities prior to the assessments, in addition to the chance to participate in decisions involving, for example , the simplification of accessory obligations and systems automation.

â € œThe repressive logic is not efficient. The international experiences of the most modern tax administrations show that this new model boosts fiscal regularity, â € says Rogà © rio Ceron, deputy secretary of the Finance Department of Sà £ o Paulo (Sefaz-SP).


The benefits package to be awarded to the best classifieds has three fronts. One of them concerns inspection.
According to Ceron, the idea is to encourage self-regulation for taxpayers who represent the lowest risk.
Whenever the Treasury finds an inconsistency, instead of assessing it, it will notify the taxpayer, who may or may not accept the interpretation of the tax authorities. If the taxpayer disagrees, the matter will be taken to a committee prior to review. The idea is to prevent the disagreement from reaching the administrative level.â € â € œThe committee will be a pre-emptive step for him to clarify his reasons, which are often legitimate. This new stance will provide taxpayers with greater security and create a healthier business environment, â € he predicts.
The other benefit involves receiving the accumulated tax credits. Today, the taxpayer who enters the request to use accumulated credit is obliged to leave with the tax authorities a guarantee of 150% of the amount claimed.

According to the proposal, depending on the taxpayerâ € ™ s classification, he will be released from the guarantee requirement or his value will be less than what is currently charged. â € œIt doesn’t make sense to charge a high amount to lower risk groups. With the measure, there will be a reduction in the financial cost, â € he explains.

In a model similar to that used by risk rating agencies, the tax authorities classify taxpayers according to their exposure to tax liability risks in A +, A, B, C, D, E. A previous analysis that takes into account the current default rates, according to Sefaz, shows that about 80% of taxpayers tend to be classified up to position C.
“In São Paulo, the majority of taxpayers (94%) pay the tax on time,” says Ceron. According to him, after the Legislative has approved and implemented the new model, the taxpayer will have 180 days to regularize his fiscal situation and debut the model with a good rating.

All notes will be released and updated on the Sefaz website. Punctual defaults, up to three months, explains Ceron, will not lower the rating. And, to rise in the ranking, just regularize the pending with the tax authorities.

The proposal is supported by ETCO (Brazilian Institute of Competition Ethics), IDB (Inter-American Development Bank) and other entities such as the São Paulo Commercial Association (ACSP), Union of Accounting Service Companies (Sescon-SP), Fecomercio SP, Fiesp and Anamaco.

“This initiative by the São Paulo State Finance Department is innovative. We need to value the taxpayer who complies with his obligations and close the siege against the persistent tax evaders who cause enormous damage to the tax authorities and fair competition. The state must modernize and contribute to the best business environment ”, says Edson Vismona, ETCO's executive president.

To know the draft of the project and make suggestions click here.



Paraná publishes Decree Law on the Contumaz Debtor of ICMS



The State of Paraná published Decree Law No. 3.864, which qualifies the Contumaz ICMS Debtor, also establishing that the CRE (State Revenue Coordination of PR) may determine a special control, inspection and payment regime for taxpayers considered permanent debtors. .

This is one of the ways that the ETCO defends: the inclusion of the concept of incumbent debtor in the new rules for the collection of the Union's active debt and instruments to combat companies that practice anti-competitive prices.

Click here and access the full Decree Law



STF grants injunction suspending change in ICMS payment

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.

Source: (17/02)

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New ICMS overloads e-commerce

Law that changes charging in interstate sales brings bureaucracy to companies; for OAB, inclusion of Simples companies is unconstitutional


The change in the collection of ICMS in non-face-to-face sales between two states, in force since January 1st, has created a major headache for e-commerce companies, especially small businesses. With excess bureaucracy and rising costs, many entrepreneurs across the country are stopping selling to other states or even ending activities. Before, the tax collected in each operation was only with the State of origin of the product. With Constitutional Amendment 87/2015, the ICMS is now shared with the State of destination of the sale. Thus, the entrepreneur now needs to open tax registration in each of the States and make the monthly collection in a specific guide or collect a National Guide for the Collection of State Taxes (GNRE) for each sale made to each consumer outside his State.

Source: The State of São Paulo (14/02)

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E-commerce estimates losses of R $ 5 billion with change in ICMS

The new tax rules on product sales over the internet are expected to reduce e-commerce revenue by R $ 5 billion this year, previously estimated at R $ 56,8 billion at the end of 2016, according to the Brazilian Electronic Commerce Association ( ABComm). The association argues that the sharing of the tax between the state of origin and destination of online sales, implemented on the last day of the 1st, has bureaucratized and stopped the operation of thousands of small virtual stores opting for Simples Nacional, and that the new system generates duplication and double taxation. Before, ICMS was charged only in the state of origin of the product.

Source: O Globo (28/01)

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Entities go to STF against new ICMS sharing for Simples

The director-president of the Brazilian Micro and Small Business Support Service (Sebrae), Guilherme Afif Domingos, said on Wednesday (20) that the National Trade Confederation (CNC) will file an injunction with the Federal Supreme Court ( STF) to suspend the application of the ICMS sharing rule (Tax on the Circulation of Goods and Services) between the states, in force since the beginning of the year, for companies enrolled in Simples Nacional, that is, with revenues of up to R $ 3,6 million per year.

According to Afif Domingos, the request for an injunction with suspensive effect from CNC will be signed by ten other entities. They are: Confederation of Commercial and Business Associations of Brazil (CACB), National Confederation of Shopkeepers (CNDL), National Confederation of Industry (CNI), National Federation of Accounting Service Companies (Fenacon), Brazilian Association of Commercial Automation (Afrac ), Brazilian Association of Electronic Commerce (ABComm), Commercial Association of Rio de Janeiro (ACRJ), Commercial Association of São Paulo (ACSP), Brazilian Chamber of Electronic Commerce ( and Union of Accounting Services Companies ( Sescon-SP).

Source: G1 (20/01)

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