Tax substitution reflects on drinks

The inclusion of wines and sparkling wines in the list of products in tax substitution in Rio de Janeiro reignites an old discussion about the taxation of beverages. In Rio Grande do Sul, the measure does not seem to have any impact, since the tax substitution in the segment has been adopted since 2009. However, it is necessary to pay attention to the interstate relations between the two states. Since the beginning of this month, the drink has joined the list of products in tax substitution in the state of Rio de Janeiro.

Source: Jornal do Comércio / RS - 12/11/2014

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Commission questions the ICMS collection system for alcoholic beverages in Rio de Janeiro

The change in the collection system of the Tax on Circulation of Goods and Services (ICMS) for alcoholic beverages, except draft beer and beer, and other items, scheduled to start in November, is the subject of questioning in the Rio Justice. Deputy Luiz Paulo ( PSDB), at the head of the Taxation Commission of the Legislative Assembly of the State of Rio de Janeiro (Alerj), filed for representation before the Special Body of the TJ-RJ, asking for the unconstitutionality of Decree No. 44.950, of September, to be determined. It extends the tax substitution regime to items such as drinks and cleaning articles.

“New requirements or tax increases must be established by law. And when this is done, you can only be charged from the following year, ”he said.

The tax substitution provides for the payment of ICMS to be made by only one link in the chain, in place of the current system, which provides for collection at each stage the product travels to the consumer. Under the regime, the taxpayer responsible for collection pays the tax throughout the chain. Then, it passes the value on to the price of what it sells at wholesale and retail.

To calculate the ICMS due for the chain as a whole, it is necessary to estimate the final price of the product. One way is to use an Earned Value Margin (MVA). The tax rate does not change. Entrepreneurs in the wine sector expect prices to rise by up to 50%, as O GLOBO showed last Sunday.

A previous question submitted to the Justice by the deputy on tax substitution, referring to Decree 43.749 / 2012, was recognized by the TJ-RJ. The state government appealed to the Federal Supreme Court (STF) in August.

Regarding the questioning related to the 2012 decree, the State Finance Secretariat said that it follows the interpretation of the State Attorney General's Office that the adjustment is in the estimate of the sale value and not in the rate, which means that there is no increase in the tax. Regarding the new questioning, he said that it has not yet been notified.

Source: Diário de Pernambuco - 22/10

Three questions for Albérico Mascarenhas


What are, in your opinion, the conditions for reaching the end of the fiscal war?

States must find an urgent solution to the fiscal war, which is taking on huge proportions. We need to give legal certainty to the process and allow the companies' business and investment environment to flow again. It is still necessary to find ways to resolve the past, validating benefits granted, more or less as proposed in Agreement 70/14, which is very well placed when proposing a solution to the fiscal war. The difficult thing is to reach an agreement on the conditions imposed by the States for the final materialization of the agreement. This has to be rethought.


Do you believe that there is a way to materialize the 70/14 Agreement without these conditions or in some other way?

The federal government has already signaled the possibility of creating a regional fund and a compensation fund. It is necessary to discuss with the government what the limits of these initiatives are. I see no difficulty in negotiating a fund like the one intended by the States. The tax reform forecasts that depend on Congress, PEC 233/08, Senate Resolution 72, are all in progress. There is more or less consensus and convergence in the way they are being conducted. Just speed up the process in Congress. The other differences are overcome by the States. The issue of debt has been debated for a long time. I do not believe that it is a condition for the approval of Agreement 70/14.


Regarding Confaz, you said that a good part of the reform could be carried out within the scope of the council. Please explain.

 Confaz has the power to resolve most of the fiscal war. It is not so simple, but he can provide a solution to most of the issue with a simple agreement that has this objective. Another thing that Confaz can resolve is the ancillary obligations, that is, making them more rational, reducing them. The computerization of the state tax authorities is growing. This tends to decrease ancillary obligations and simplify the fiscal model. The approval of a constitutional amendment is much more complex. It depends on the consensus of two thirds of parliamentarians in the House and the Senate. In Confaz there are 27 states, 27 secretaries. Moving forward on the issue of the fiscal war, it is easier to understand all other points for simplifying the tax system, with regard to the ICMS.



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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ETCO calls for rational solution to fiscal war

Concerned about many impasses of regional investments in the country, due to the legal uncertainty resulting from the fiscal war, the Brazilian Institute of Ethics in Competition defends an intensive discussion in search of a rational solution to the issue of incentives. ETCO's executive president, Evandro Guimarães, says that the solution to the conflict needs to be reached in the National Congress, where the conditions necessary to end the clashes between the states can be negotiated.

“The definitive solution is not easy, but it needs to be discussed, repeatedly, and through the legislative route, which is the appropriate forum for complex issues like this”, defends Guimarães. For him, the biggest challenge is to increase legal certainty, under the risk of investment escaping.

The Executive President stresses the importance of the discussion, possible improvement and approval of the opinion of PLC 130/14 (by Senator Luiz Henrique - PMDB / SC), making the legislative process effective with a view to ending the conflict effective.

In his opinion, approval of the opinion would be a first step in the discussion about the fiscal war.

Guimarães affirms that the approval of this first stage will signal the Congress' willingness to avoid turmoil and even greater legal insecurity, which could be established if the "fiscal war" is resolved within the Judiciary. The Federal Supreme Court (STF) has considered the benefits granted without the consent of Confaz to be unconstitutional and may vote on a binding opinion on the subject.

"If the Súmula Vinculante is approved, projects may cease their activities," says Guimarães. Companies could be at the mercy of administrative and judicial procedures aimed at charging part of the ICMS previously waived by the States, as incentives for regional industrial development.

Governors and Secretaries of Finance could also be sued for granting and maintaining incentives outside the Constitution.

Taxation in debate

The ETCO Advisory Council met on August 14 in São Paulo (SP) to reflect on the national tax system. The meeting was attended by the Senate economist and technical consultant, José Roberto Afonso. During the meeting, the expert made an analysis of the current fiscal and tax scenario of the Brazilian economy and listed a series of opportunities for improvement. The economist highlighted the need to update Brazilian tax legal frameworks, in particular Law No. 4320/64 and Constitutional Amendment No. 18/65, which were idealized in an economic context very different from the current one.

Specific taxation is the subject of a book

Download: Specific Taxation - ETCO, Latin Quarter (281pp, PDF, 990Kb)

In order to contribute to a better understanding of the Brazilian tax system, the Brazilian Institute of Competition Ethics - ETCO gathered in a book, eight opinions, from renowned experts, dealing with important aspects of ad rem taxation.

The book - “Specific Taxation” - was coordinated by the legal expert Hamilton Dias de Souza and the opinions of Alberto Xavier, Ives Gandra da Silva Martins, Sacha Calmon Navarro Coêlho, José Souto Maior Borges, Alcides Jorge Costa, Gustavo Madi Rezende and Tomas Anker .

According to André Franco Montoro Filho, President of ETCO, the ease of collecting and inspecting specific taxes are a powerful weapon in combating tax evasion and in preventing competition imbalances.