Discussing incentives and exemptions for the service sector broadly ‘does not make sense’, says Appy

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The subject is still considered sensitive among businessmen; The working group is expected to deliver the first report on the reform in May. Bernard Appy Fabio Tito/g1 The extraordinary secretary for tax reform at the Ministry of Finance, Bernard Appy, said this Friday (10) that broadly debating incentives and exemptions for the service sector “does not make sense”. “Differential treatment for the service sector is a decision for parliament, but great care must be taken. One of the goals of the new model is to reduce the net cost for service takers and consumers,” he said. “So obviously there are going to be some issues [de incentivos e desonerações] in the health and education sectors, but discussing this for the entire service sector broadly makes no sense at all,” said Appy. The secretary was asked about incentives for the sector by businessmen during an event on the subject, promoted by the American Chamber of Commerce for Brazil (Amcham) this Friday (10). Although Appy has already defended that the ideal would be a model with the “minimum possible exceptions” to the new consumption tax, the topic is still considered sensitive among businessmen. The exceptions are tax benefits granted to sectors and segments of society. Bernard Appy talks to Jornal da Globo about tax reform The concern, according to executives, is that with the implementation of a single rate, some sectors end up paying more taxes, while other segments have a reduced tax burden. “The tax reform has a very positive impact on the country’s growth. And when we incorporate this scenario, all sectors of the economy benefit. We know that Congress has yet to discuss the exceptions, but all sectors would benefit anyway”, explained Appy. “So either we understand that it is a win-win game or there is no point in discussing tax reform. We want the reform to correct problems that prevent the country from growing and not just to simplify the current system”, added the secretary. According to deputy Reginaldo Lopes (PT), coordinator of the tax reform working group, the expectation is to deliver the first report on the subject on May 16. And the idea is that the reform be dealt with in two phases: the first would serve to implement the single tax on consumption — the so-called IVA (Value Added Tax) —, while the second phase would debate a model of taxation on income and the equity.

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