Tax Reform Report will provide compensation for unification of ICMS

However, the committee chairman did not say how much the tax rate will be.

The chairman of the Special Tax Reform Commission, deputy Hildo Rocha (PMDB-MA), anticipated that the final report by deputy André Moura (PSC-SE) will provide for the creation of a fund to compensate states for eventual losses in tax collection resulting from the unification the legislation on the Tax on Circulation of Goods and Services (ICMS).

Photo by: Agência Câmara Notícias - Gustavo Lima


“There is a forecast, within our global agglutinative PEC, to compensate for the state that may lose. Of course, in a change like this, someone will lose, but we are creating a Revenue Equalization Fund for no state to lose. This will come from the resources of the IPI (Tax on Industrialized Products), the Income Tax ”, he said.

Unification of rates 
The unification of the rates is one of the main points of the report that, according to Rocha, will be voted on in November by the Special Committee and until the end of the year in the plenary of the Chamber. However, the committee chairman did not say how much the tax will be.

Today there are 27 different state legislations on ICMS and many states, mainly in the Midwest and Northeast, charge lower rates to attract companies to their territories, the so-called “fiscal war”.

In 2008, a substitute presented by former deputy Sandro Mabel already predicted the end of the fiscal war and the unification of the rates, bringing together several proposals on tax reform (PECs 233/08 and 31/07, among others).

The substitute proposed by Mabel was approved by the special commission but was not analyzed at the Plenary of the Chamber, mainly because it faced opposition from states that considered themselves harmed.

According to the committee chairman, there is still opposition. He guarantees, however, that most states support the measure. "Some states in the Midwest region stand against the end of the fiscal war, against the single legislation for this tax, which is one of the most complex we have," he said.

Finance Offices
The proposal for a fund to compensate states that lose revenue was presented in August, in the Chamber, by representatives of state finance departments. They defended the inclusion of the fund in the Constitution - and not through a Provisional Measure, as the government intended.

To try to reach consensus, the commission held public hearings in several states to hear the opinion of businessmen and representatives of governors. Last Monday (26), the deputies were at the headquarters of the Federation of Industries of Maranhão (Fiema), in São Luiz (MA), where they heard suggestions from businessmen.

The vice-president of Fiema, Cláudio Azevedo, said that, in general, the entity's proposals are the same as those formulated by the National Confederation of Industry: harmonization of the ICMS, IPI, PIS and Cofins calculation base, unification of the ICMS legislation and reduction of the tax burden.

In addition to the unification of the 27 state ICMS laws, the proposal that will be presented by deputy André Moura also foresees the replacement of taxes such as Cofins, PIS, Cide-Combustível and the education salary with the Value Added Tax (VAT) provided in PEC 233/08, presented by the Federal Executive.

“With VAT, what is intended is to end the cumulative nature of taxes throughout the production chain, since products are taxed even when one is used in the manufacture of another. In addition, VAT will also be shared with states and municipalities, ”said André Moura, on his personal website.

In August, at a public hearing of the commission, economist André Alencar, of the National Confederation of Municipalities (CNM), said that the unification of the Service Tax (ISS) with the Tax on the Circulation of Goods and Services (ICMS) to create a State Value Added Tax (VAT) would only be possible if there was no decrease in resources for the municipalities.

Source: Agência Câmara Notícias (28/10)

PIS and Cofins reform will be carried out in three stages

The government will reform the PIS and Cofins in three stages. The first change, which should be sent to Congress later this month, will take place in the PIS. After a year of testing with the new PIS, it will be the turn of the Cofins reform. In a third stage, PIS and Cofins, contributions that finance social security, will be unified in a single tax in a model very similar to the Value Added Tax (VAT) charged by European countries.

Source: Estadão website (06/08)

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