Tag: Brazilian tax system

Supreme court cuts ICMS for PIS / Cofins calculation

The Supreme Federal Court (STF) chose yesterday to exclude the Tax on Circulation of Goods and Services (ICMS) from the PIS / Cofins calculation base in a specific case. The decision shows how the Court should position itself definitively, within a few weeks.

The extraordinary appeal 240.785, appreciated yesterday, had been stuck in the Supreme Court for almost 16 years - since 1998. Taken to the plenary for the first time in 2006, six ministers gave a favorable opinion to the taxpayer, reducing the calculation base. At the time, only retired minister Eros Grau voted against the exclusion.

Despite the opinion of most of the STF, Minister Gilmar Mendes asked for views to better study the case. He returned the lawsuit in 2007. Since then, the trial has remained pending.

Yesterday, in a long exposition of his vote, Gilmar Mendes stated that a result of the exclusion of ICMS from the calculation would be a rupture in the Brazilian tax system. According to the minister, if an exception is made, the same reasoning could be applied in relation to other taxes.

He even added that the exclusion of ICMS from the calculation base “does not result in a reduction in the Brazilian cost”. This is because such a decision would increase legal uncertainty in the country.

Mendes also explained that the decrease in the Cofins calculation base would have limited effects. For him, compromising the financing of social security only creates the need to find other sources of funds for social security, which is already deficient.

Despite the arguments presented, Minister Celso de Mello ended up following the opinion of most ministers. Minister Rosa Weber chose not to vote. With that, the vote ended in seven votes against two.

Source: DCI

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High taxes will have minimal impact on beverage prices, says Revenue

The new multipliers used to calculate taxes on cold drinks - beer, soda, soft drinks, isotonics and energy drinks - will have a minimal impact on final prices, the Federal Revenue Service said on 01/10. According to the agency's general tax coordinator, Fernando Mombelli, prices will rise by a maximum of 0,25% with the increase in the calculation base for the Tax on Industrialized Products (IPI), the Social Integration Program (PIS) and the Contribution to o Social Security Financing (Cofins).

According to Mombelli, canned soft drinks will rise up to 0,17%, and soft drinks in glass bottles will increase up to 0,2%. The prices of soft drinks in PET bottles, which concentrate 80% of the sector's market, will not be readjusted because they did not have the calculation basis changed. For beers, the impact will correspond to 0,23% for returnable glass bottles, 0,25% for canned beer and 0,22% for disposable glass bottles, also called long neck.

The revenue coordinator pointed out that the percentages will not necessarily be passed on to prices. “These are only the maximum impacts, in case the manufacturers decide to pass on the entire tax increase. It is important to remember that the market is free, and companies can absorb the higher tax cost, not least because the percentages are small ”, he claimed.

The increase may not even reach the consumer. Last week, businessmen from the beverage sector met with the Minister of Finance, Guido Mantega, and assured that they will absorb the costs, without increasing prices, until a new tax model for the segment comes into force in early 2015. The discussions started in September and are expected to continue until the end of the year.

Businessmen and the government will discuss a new system to replace the current one, in which the rates are levied not on retail prices, but on a price list researched by Fundação Getulio Vargas and updated annually. The rates, in fact, do not apply to the average values ​​charged to the final consumer, but to a multiplier that reduces the calculation basis to reflect prices in factories.

Source: EBC - Agência Brasil
Collaboration: Pernord Richard

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Expansion of Supersimples to the service sector becomes law

President Dilma Rousseff signed, last Thursday (07/08), the proposal (PLP 221/12) that benefits about 450 thousand micro and small companies from 142 activities. They will now have access to Simples Nacional or Supersimples, the simplified tax system that unifies eight federal, state and municipal taxes into a single bill.

Shortly after the sanction, the chief minister of the Secretariat of Micro and Small Business, Guilherme Afif Domingos, celebrated the change in the concept of Supersimples, which is no longer based on professional activity but focused on the billing of the enterprise and stated that the main benefit it was the universalization of the system.

In practice, the law benefits all legal entities that fit as microentrepreneurs, microenterprises and small companies, with an annual gross revenue ceiling of R $ 3,6 million. For the service sector, a new rate table (16,93% to 22,45%) was created, which varies according to the activity, such as law, brokerage, medicine, dentistry and psychology, among others.

The law arose from a project by Deputy Vaz de Lima (PSDB-SP) and was consolidated in the substitute of the rapporteur in the Chamber, Deputy Claudio Puty (PT-PA), for whom, the scope of Supersimples is seen as a package of public policies integrated, which involves reducing bureaucracy, reducing the tax burden and complying with the constitutional provision for different treatment for micro and small companies.

Reduction of bureaucracy

Several actions guarantee the reduction of bureaucracy in the processes of opening and closing companies. A unique register of entrepreneurs is created, centralized in the CNPJ, with the end of state and municipal registrations. The so-called tax substitution, used by the states to anticipate ICMS rates, also ends.

In the advocacy sector, Minister Afif Domingos predicts that the inclusion of the activity in Supersimples should increase the number of offices from the current 25 thousand to 125 thousand, soon.

Due to the tax legislation and agreements closed during the process in Congress, some provisions will only come into force on January 1, 2015. Others become effective, in fact, only in 2016, such as the prohibition of tax substitution in some sectors.

Source: Chamber News Agency

Confaz calls for postponement of ICMS reform

The National Council for Farm Policy (Confaz) decided on Friday, 15/08, at its most recent meeting, to suggest to the Senate to postpone discussions on the ICMS tax reform until after the elections. Bill 130, which is being processed by the Economic Affairs Commission (CAE), tries to end the unanimity requirement for the approval of tax incentives at Confaz.

The PL rapporteur, Senator Luiz Henrique (PMDB-SC), has not yet been officially notified of Confaz's request, according to José Clovis Cabrera, coordinator of the Tax Administration of the São Paulo Finance Department. The next meeting of the CAE is scheduled for September 2 and it is likely that the senator will speak on this date on the postponement of the vote.

Despite the request for postponement, states are seeking a rapid approval of the text. One way to pressure parliamentarians was the approval in July, by a group of 20 states and the Federal District, of a proposal to end the so-called fiscal war. Through ICMS Agreement No. 70, they undertake to withdraw the tax benefits granted without approval from the agency, as well as grant a tax amnesty to all taxpayers who were assessed for having used these incentives.

"The agreement brings the steps to arrive at a tax reform, which needs to urgently leave to attract and keep investors", says Hélcio Honda, legal director of the Federation of Industries of the State of São Paulo (Fiesp). For him, the change in the presidency of the Supreme Federal Court and in its commissions may cause the summary of the fiscal war to be edited ahead of schedule. “Therefore, a solution, with a strong pulse from the Union, cannot be delayed.”

According to Honda, a summary would precipitate the judgment of actions against incentives granted without authorization from Confaz in the lower courts. “The disaster would be the retroactive effect. Everything that companies gained with tax incentives, would have to be returned ”, says Honda.

Source: Online Value

Tax substitution

Last Wednesday, 16/07, Deputy Valdivino de Oliveira (PSDB / GO) presented his opinion for approval, with substitutive, to the Complementary Law Project (PLP) 389/14, coming from (PLS) 323/10, from former Senator Alfredo Cotait (DEM / SP), which defines the list of sectors opting for Simples Nacional (Complementary Law 123/06 ) that would be subject to tax substitution.

This substitute intends to change some articles in the Simple System Law, mainly about the way companies will pay taxes. In addition, it also appears in which cases, according to products produced, there may be tax substitution. Fuels, cigarettes, beverages and electronics are on that list.

The presented project is awaiting a decision on the opinion of the Economic Development, Industry and Trade Commission (CDEIC). Subsequently, it will be analyzed by the Finance and Taxation (CFT) and Constitution, Justice and Citizenship (CCJC) Commissions and, finally, it should be evaluated by the Chamber of Deputies Plenary, where it may receive amendments during its discussion.

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Source: Agência Câmara Notícias 

Low growth of the Brazilian economy in 2014 may affect the agricultural industry

The low growth forecast for the Brazilian economy in 2014 may affect the agricultural industry, concluded several participants at the 13th Brazilian Agribusiness Congress, held in São Paulo.

“We had a period of accelerated productivity in the Lula government and a slowdown in Dilma's, but despite the change, there is a trend in the permanent tax burden,” explained Samuel Pessoa, a researcher at the Brazilian Institute of Economics (IBE).

Pessoa attributed the productive slowdown to low investment, and the forecast of growth analysts in the agribusiness sector was 0,6%, a percentage considered low.

Financial market analysts reduced Brazil's growth forecast for 10 for the 2014th consecutive week, which was 0,86%, against the 0,9% projected last week, the Central Bank reported today.

Despite the projection of minimum growth for agroindustry and a reduction in the country's Gross Domestic Product (GDP) this year, the vice president, Michel Temer, highlighted the "success" of the agricultural sector at the same congress.

“Agribusiness is one of the engines of the national economy and a good percentage of GDP, has an extraordinary prestige from the government through subsidized interest and incentives of the most varied”, pointed out Temer.

The vice president denied the criticisms that the credit lines are not reaching the sector and specified that the government makes "loans" with interest reduction and extension of the payment terms of the credit debts.

However, Pessoa stated that it is “common” that the impact on the level of productivity is associated with the dynamics of the international market, but in the case of Brazil, this premise does not fully apply because the economy is “closed” to the price of exports and imports .

After the 2008 crisis, Pessoa added, Brazil went through a period of high prices for raw materials, with a devaluation of the dollar and inflationary instability, factors that oppose a signaling of the dynamics of the international economy as the only one responsible for the “brake” for agribusiness.

According to the analyst, for an increase in productivity, it is necessary “a maturation of institutional public policies” and an increase in the exchange rate, which has fluctuated around R $ 2,25 for each US $ 1.

Without changes, Pessoa believes that the country will undergo a reconfiguration of the inflation scenario, which fluctuates close to the limit of the official target, of 6,5%, and by a “certain exchange control”.

"We have to do an urgent tax reform, Brazil does not have a favorable environment for business and we are by far the worst country in this item", he evaluated.

In this sense, the political analyst Christian Lohbauer, said that before reevaluating the economic policies for the sector, the challenge is to ensure that sectors outside the rural area are attentive and informed about the country's agricultural development.

“Agroindustry is an activity that generates exports, moves and is saving the country's economy”, defended Lohnauer at the event.

Regarding the criticisms of the tax burden and its interference in the agribusiness, Temer admitted the "difficulties" to implement a tax reform in Brazil.

“It is a delicate issue. Tax reform does not go ahead. So the government gave benefits to the country's productive sectors, making a kind of “sliced” reform, which will continue to happen ”, he stressed.

Source: Exame Online Portal

Entities propose simplification of the tax system

Legal Consultant - São Paulo / SP - LAWS - 09/05/2013

A proposal for the Simplification and Rationalization Program for the Tax System was delivered on Monday (6/5) to President Dilma Rousseff. Coordinated by the São Paulo Commercial Association, the text was prepared by a working group composed of the Brazilian Institute of Ethics in Competition (ETCO), the Federation of Goods, Services and Tourism of São Paulo and the Union of Accounting Service Companies, Advisory, Expertise, Information and Research of the State of São Paulo

The document brings together a set of rules to improve the Brazilian tax system, including a proposal for a constitutional amendment, a draft supplementary law and a draft ordinary law. The three measures are connected and can serve to simplify and streamline processes, provide greater legal certainty, change some provisions of the National Tax Code and adapt the legislation to the current demands of Brazil.

According to the executive president of ETCO, Roberto Abdenur, “the complexity of the Brazilian tax system is today one of the main motivators of tax evasion and informality that hamper the process of formalizing the economy and, ultimately, the country's development itself ”.

Among the measures suggested in the PEC is the veto to issue a provisional measure on tax matters, to avoid legislative excesses of the Executive. The proposal argues that Constitutional Amendment 32, of 2001, which prohibits the increase or reduction of taxes on imports, exports, industrialized products and credit operations (present in article 153 of the Constitution) and extraordinary tax provided for cases of external war or its imminence (foreseen by article 154 of the CF) was not enough to restrict the changes.

In order to reduce legal uncertainty, it is suggested that the minimum period for the start of tax liability should be six months, and not the 90 days provided for by the Constitution. The entities also defend the revocation of the impediment of hiring by the government or of granting benefits to companies in debt with the social security system.

In the draft laws, the regulation of financing and refinancing of tax debts, amnesty restrictions are claimed so that this type of benefit is granted only in cases of calamities and debts of small value. It is also suggested that the Public Treasury must publish, in the previous year, the fine mesh criteria, in addition to setting maximum values ​​for fines. With information from the ETCO Press Office.

Simplification of the tax system and law against unfair competition are discussed by experts

A meeting held by ETCO, in the last week of July, brought together representatives of the institute and the specialized press on the theme “Taxation and Business: Obstacle or Instrument for Development”. With the presence of tax attorneys Everardo Maciel and Hamilton Dias de Souza and the chief executive of ETCO, Roberto Abdenur, issues such as simplification of the tax system and regulation of article 146-A of the Constitution were discussed. 

Currently, the incidence of taxes accounts for 36% of the Brazilian Gross Domestic Product (GDP). This data alone should not cause so much concern, since, as is known, countries with a high level of development present even higher burdens. The issue becomes worrying when the tax burden is compared with the GDP per capita of these countries.   

    

The chief executive of ETCO, Roberto Abdenur, explains that "despite being vital for the country, the current tax system is considered as one of the main obstacles to economic development". Abdenur also highlights as one of the main impacts caused by the high tax burden on the economy, the increase in the cost of production in the industry, which discourages investments.

Data from the Federation of Industries of the State of São Paulo (Fiesp) show that, in Brazil, 64% of entrepreneurs point to the tax burden as a limitation of investments and 59% of them point to it as the main obstacle to innovation. The situation is even worse when this same load is assessed with the Human Development Index (HDI).

“While the Brazilian tax burden increased by 24,4% between 1994 and 2007, the HDI grew only 10,7%, which proves that the increase in taxes is not favoring the development of the population”, explains Abdenur.

Abdenur also mentions that, in Latin America, Brazil is the country with the highest tax burden. It is above Argentina (30,6%), which faces a long period of economic problems, as well as the region's average, which is 20,9%.

"By taking into account the bureaucracy of our tax system, according to a study by the World Bank, Brazil is also in a bad position," adds Abdenur. While in Switzerland - which has a similar load to that of Brazil - companies spend 63 hours to pay basic taxes, here the standard time is 2.600 hours, the worst in the world.

Former Federal Revenue Secretary and member of the ETCO Advisory Council Everardo Maciel presented one of the institute's proposals, whose main basis is to reduce bureaucracy.

For Maciel, there are some measures that can help in the process of simplifying and rationalizing the tax system. Among them is the unification of legal entities (CNPJ) in the federal, state and municipal registries. “We want to introduce this into the National Tax Code. It does not make sense for the same company to register in each of these units of the Federation ”, evaluates the former secretary of the Federal Revenue.

Another suggestion is that full anteriority be implemented. In other words, any change must have a deadline to be defined, which in the case of the ETCO proposal is until June 30 of the previous year. In the same vein, the institute suggests that the tax legislation for all taxes be consolidated by September 31.

The tax attorney and member of the ETCO Advisory Council Hamilton Dias de Souza presented the proposed regulation of Article 146-A of the Federal Constitution by means of a complementary law that may establish special taxation criteria, “with the objective of preventing competition imbalances, without prejudice to the competence of the Union, by law, to establish norms with the same objective ”. The intention is to allow states and municipalities to improve the competition of companies.

"This law does not create the criteria for taxation, but it allows the Union, States and municipalities to create them and it is up to a complementary law to create a framework for such taxes", explains Dias de Souza, who was one of those responsible for writing the article.