IPVA for jets and yachts enters the tax reform – 06/06/2023 – Market

The new proposal for tax reform that will be prepared by the Chamber of Deputies will provide for changes in property taxation, which includes the forecast of charging IPVA on some water and air vehicles.

Rules on the progressivity of the ITCMD (state tax on inheritance and donation) and the obligation for municipalities to update the IPTU calculation base at least once every four years also entered the text.

The changes are a way to bring more support to the text, on the part of governors and mayors, in addition to making the proposal fairer from the point of view of taxing the richest.

In relation to already taxed vehicles and new ones, the IPVA may be progressive due to the vehicle’s carbon footprint, according to the proposal.

STF has already barred charges on jets

Regarding the IPVA, the Constitution provides that the state tax is charged from the owners of motor vehicles, without specifying which ones.

When analyzing the constitutional text on several occasions, the STF (Federal Supreme Court) understood that the tax only covers land vehicles. Therefore, it barred the attempt to charge by some states, such as Rio de Janeiro, São Paulo and Amazonas, in recent decades.

For the court, the IPVA replaced the former TRU (Single Road Tax), which historically excluded vessels and aircraft from payment. The purpose of creating the tax instead of the fee was to allow the division of the resource between states and municipalities, and not to expand the tax base, according to the Supreme Court. The STF also understands that taxing air or water vehicles is not within the competence of the states, as the licensing of these vehicles is done by the Union.

To overcome these restrictions, it will be necessary to change the constitutional text at this point, which will be done through the approval of a PEC (Proposed Amendment to the Constitution).

government support

In the second round of the 2022 elections, Minister Fernando Haddad (Finance), then candidate for the government of São Paulo, committed to the PDT proposal to also tax jets, speedboats and helicopters with the IPVA.

The Extraordinary Secretary for Tax Reform at the Ministry of Finance, Bernard Appy, participated in 2022 in the preparation of a set of economic proposals that also suggested the taxation of these two types of vehicles.

Collection

A 2020 study by the Sindifisco Nacional (Union of Federal Revenue auditors) estimated an additional revenue of BRL 4.7 billion per year with the expansion of the tax base. This would represent an increase of almost 10% in IPVA collection.

Almost 90% of this value refers to vessels, and the other 10% to jet aircraft, turboprops and helicopters.

“The Brazilian executive fleet is the largest in the southern hemisphere and the third in the world, behind only the United States and Canada. It is shocking that couriers pay property taxes on their motorcycles and the owners of these air limousine squadrons pay nothing. It is the principle of ability to pay provided for in the 1988 Constitution applied in reverse”, says Isac Falcão, president of the National Sindifisco.

How would this charge be?

The taxation of these vehicles should not be unrestricted. A complementary bill presented in 2021 by former deputy Severino Pessoa (MDB-AL), for example, provided for an exemption for aircraft or vessels used in public transport or cargo or that did not have their own propulsion (such as rowing or sailing boats). . The tax would also not be charged when the vehicle was used in artisanal fishing or scientific research.

A 2013 proposal by former deputy Vicente Cândido (PT-SP) also provided that water and air vehicles for commercial use intended for fishing and the transport of passengers and cargo would not be taxed. PEC 283/2013 provided for the taxation not only of property, but also the ownership of vehicles, which would prevent assets registered in the name of individuals or companies domiciled abroad from escaping the tax.

Reports from Sheet showed that the market for yachts and jets is experiencing a boom in Brazil, with a delivery queue for some luxury models.