Lawyers highlight positive and negative points of the new version of the Tax Reform – 10/25/2023 – What tax is this

The new version of the Tax Reform presented this Wednesday (25) by Senator Eduardo Braga (MDB-AM) has as its negative point the increase in exceptions to the new tax system, but it is correct in seeking greater uniformity between the two main taxes (CBS and IBS) and resolve political issues that could hinder the final approval of the text. This is the assessment of some experts in the field interviewed by the Blog.

Vanessa Canado, coordinator of Insper’s Taxation Research Center, says that the increase in the number of exceptions reduces the economic gains expected from the reform and imposes a higher rate on other taxpayers.

She warns of the possibility that many specific regimes have cumulative taxation and revenue, maintaining inefficiencies that the reform aims to eliminate.

“The complexity has increased. The level of economic efficiency of the tax has worsened”, says the lawyer, noting that the new tax system will still be better than the current one.

Canado states that the differentiated treatment will have no effect on the majority of services provided by lawyers, who will have the rate reduced by 30% along with other independent professionals. This is because around 70% of these services are provided to companies that could take advantage of these credits.

“Either the lawyers didn’t know how to do the math or they just wanted to show that they have power, they wanted some leadership in this Tax Reform process.”

Thiago Amaral, partner in the tax area at Demarest, states that the new version brought some positive changes, such as restrictions on the Selective Tax, a new solution for the Manaus Free Trade Zone and the standardization of the two main taxes created by the reform.

“There is concern about not having a discrepancy in interpretations between IBS and CBS, as they are [tributos] twins. It is an attempt to have information and activities shared by the Management Committee and the National Treasury, even with the centralization of litigation, so that you do not have discrepant interpretations”, he states.

He also cites the resolution of political issues that can help with the approval of the reform, such as the increase in resources from the Regional Development Fund, changes to the Steering Committee formed by states and municipalities and the benefits for electric cars produced in the Northeast.

On the other hand, it criticizes the selective taxation on the extraction of minerals and oil, including exports of these products, and also the maintenance of the 240-month deadline for the return of ICMS credits.

Tax specialist Mary Elbe Queiroz, partner at Queiroz Advogados, states that the creation of a VAT (Value Added Tax) along the lines proposed by the reform will worsen the national tax system, and the new version of the proposal does not change this assessment. “In my opinion, very little has improved,” she says.

She assesses that centralizing collection in the Steering Committee for the new state and municipal tax will harm the finances of these entities.

The lawyer also sees few gains from reducing the tax rate for regulated professions. “Those who did it think there were great improvements and that they would be solving most of the problems. I don’t see it that way.”

Although the tax burden restriction foresees the use of the 2012-2021 average, the tax expert states that there will be resistance from the states, which are raising their taxes on consumption this and next year, to lower the level of collection. “Everyone has already increased it, and they won’t accept lowering the rate they are putting there.”

The president of the IBP (Brazilian Institute of Petroleum and Gas), Roberto Ardenghy, states that the report caused concern in the oil and gas sector, due to the imposition of a selective tax for this activity of 1%, also including mining.

According to him, all sectors of the economy have some dependence on this activity, and the extra taxation should have an impact on prices. Another point is Brazil’s loss of competitiveness in relation to other countries. “We think that this measure should not prosper, because it ends up burdening society as a whole.”

LINK PRESENT: Did you like this text? Subscribers can access five free accesses from any link per day. Just click the blue F below.