Congress should overturn Lula’s vetoes to tax simplification project, says IBPT – 08/13/2023 – Market

The IBPT (Brazilian Institute of Planning and Taxation) advocates that the National Congress overrule President Luiz Inácio Lula da Silva’s (PT) vetoes to the law that simplifies ancillary tax obligations, sanctioned in early August.

According to the institute, this bureaucracy represented a cost of R$ 207 billion for taxpayers last year, equivalent to 1.5% of the revenues of Brazilian companies.

In the government’s assessment, some provisions of the law took power away from the Federal Revenue Service and could increase costs for companies. In total, there were eight vetoes proposed by the Treasury and by the AGU (Attorney General of the Union).

Two important pillars of the measure that sought to simplify ancillary tax obligations, a term used to identify declarations and requirements that taxpayers need to comply with, in addition to paying the due taxes on time, came out of the proposal.

The creation of the Electronic Brazil Invoice, which unified the documents and tax records of all companies in the country, and the Brazil Digital Tax Declaration was vetoed. The government also prevented the participation of representatives of civil society in the committee that would oversee the simplification measures and also removed from the law the deadline for the creation of the body.

As shown to Sheetmembers of the Treasury assessed that this would give taxpayers decision-making power over which instruments the Revenue Service can use to supervise them —which is seen as a conflict of interest.

The six seats of the employers’ confederations alone would not be enough to veto any committee resolution, but the support of three other representatives would be enough to bar accessory obligations.

The competence of the Management Committee of Simples Nacional to reduce tax obligations of small businesses was also vetoed.

“We are against these vetoes and we hope that there is the possibility of overthrowing them in Congress”, says João Eloi Olenike, executive president of the IBPT.

According to him, companies would have an initial cost to adapt to the simplified system, but this would be more than compensated with the savings made in the following years. “It ended up practically destroying the good intentions of the National Congress. Only what is not so important for the companies was left. We would have a great economy in relation to the cost that they have to fulfill the ancillary obligations.”

Olenike claims that the transition envisaged in the Tax Reform under discussion in Congress will increase this bureaucracy over a period of ten years and that it would be important to have mechanisms to reduce this negative impact.