Pacheco defends tax ceiling in Tax Reform – 08/21/2023 – Market

The presidents of the Senate and of Fiesp (Federation of Industries of the State of São Paulo) defended a ceiling of 25% for the main taxes created by the Tributary Reform, a proposal that is seen by the Ministry of Finance as a risk to the finances of the federal government and also from states and municipalities, if it is not possible to maintain the current tax burden. According to the government, industry now pays 34%.

In an event held this Monday (21) in the capital of São Paulo, Rodrigo Pacheco (PSD-MG), who is president of the Senate and also a lawyer, said he had asked the rapporteur for the matter in the House for special treatment for liberal professionals, including , those in the field of law.

The president of Fiesp, Josué Gomes da Silva, asked the presidents of the Chamber and of the Senate to place in the Constitution a limit for the rate of 25% of the taxes created by the Tributary Reform.

“The industry does not want an exception, it just wants the maximum rate to be at the level of 25%. As long as there are exceptions, this rate tends to rise”, said Josué during an event held at the entity’s headquarters.

Pacheco said he agreed to a limit. “What I have defended and I also believe the idea of ​​the rapporteur, Senator Eduardo Braga, is that, already in the constitutional reform, there is a ceiling on the rate. Senator Eduardo Braga has even used an expression, I don’t know if that exists in the dictionary, in the vernacular, is tetar. The verb to put the ceiling”, said Pacheco.

Also present at the event, the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy, said that the rate of the new taxes will be the one that maintains the current tax burden, considering that there will be some exceptions, and that the industry is currently taxed in 34 % plus IPI (Tax on Industrialized Products), which varies for each product.

He also recalled that the government estimates at up to 27% the rate that represents the sum of the new federal tax (CBS) and the new state and municipal tax (IBS). A lower value may affect the collection of all these entities.

“The guarantee that there will be no increase in the load is absolute. If you need to make it clearer, let’s make it clearer than it already is. Limiting the rate is a very risky strategy. You set a limit and then more exceptions are approved. Then the account does not close and I have a tax problem”, said Appy.

Exception for lawyers

Pacheco also said that he has already asked the Senate reform rapporteur for special treatment for self-employed professionals, who, according to him, may have an increase in the tax burden that harms those who receive it as a legal entity.

“I already applied for the [relator] Eduardo Braga, defending my category, because I have my history in law”, he said. “My position as president of the Senate has always been to defend the reform, although it affects liberal professionals a lot, it affects lawyers a lot.”

He said lawyers have a 14% to 15% charge when working through a legal entity. Below what they would pay as an individual. Of this total, 5% would be the taxes dealt with in the reform (ISS, PIS and Cofins). According to the senator, this already raises the burden to 35%.

If there is taxation of dividends with 15% Income Tax, a topic that should be subject to another reform in 2024, the charge could reach 25%.

“We are going to be talking about a 50% charge for a professional who is confused with his own company. He may even have the option of advocating in the individual and will pay 27.5%. This is a dysfunction. It discourages the formation of a person legal, it discourages formality. The Tax Reform needs to be thought about how to solve this”, said the President of the Senate.