Restaurants estimate an increase of up to 20% in prices without differentiated tax regime – 07/17/2023 – Market

The unification of federal (PIS and Cofins), state (ICMS) and municipal (ISS) taxes provided for in the Tax Reform could increase how much restaurants collect and, with that, customers may have to pay up to 20% more, says Roberto Bielawski, founder and spokesperson for the ANR (National Association of Restaurants).

Simulations carried out by the entity indicate that the final tax on the activity –from the purchase of each of the ingredients, production, to the supply of the ready-to-eat meal– would be between 14% and 15%. Currently, this tax burden varies from 7% to 8%, depending on the sector.

With an average return on the order of 10%, the change in tax collection, says the ANR, would practically eliminate the profit of these businesses. To survive, says Bielawski, there would be a need to readjust prices between 15% and 20% to cope with the increase.

A second effect, in the assessment of the ANR, would be a double negative stimulus, first to tax evasion, and second, to contain growth.

“There are companies that are in Simples [Nacional, regime simplificado de recolhimento de tributos para micro e pequenas empresas]. You will end up having a huge incentive for the sector not to capitalize, not to grow. Or, even worse, there will be tax evasion, as it used to be.”

Restaurants align themselves with the hotel sector in the demand for the maintenance of a differentiated taxation regime.

In the final stretch of the PEC (proposed amendment to the Constitution) of the reform in the Chamber of Deputies, these services managed to enter a list of activities that may have different rates and their own rules for the reduction of tax credits. The details would still depend on a complementary law.

Eduardo Braga (MDB), rapporteur of the text in the Senate, said he considered strange some exceptions included in the text of the Chamber in the last hour. “Does the exception for bars make sense? I don’t know. Looking at it that way, at first, it’s strange,” he said, on the last day 11, to Sheet.

The concern of the restaurant sector is to be included among those considered strange by the rapporteur.

Founding partner of the Ráscal group, currently owner of 20 restaurants and six brands, Roberto Bielawski says he is close to retirement. “But I can see that those who continue will have great difficulties,” he says.

Bielawski argues that the treatment given to restaurants and hotels in the Tax Reform ignores the fact that 25% to 30% of the cost of these activities come from labor costs. The ANR estimates that 1.3 million workers are directly employed in restaurants alone.

With the resumption of discussion of the text in the Senate, restaurants and hotels should press again to maintain the provision for a differentiated taxation regime.

One of the group’s arguments is that the European VAT model, inspiration for the new dual tax of the Tax Reform, guarantees differentiated treatment for the sector, so that restaurants pay a lower rate, along with other segments.

According to data compiled by the ANR, in at least 13 countries the tax charged for food, bars, restaurants and take-away food is lower than the standard rate. On average, the rate paid by restaurants is between 10% and 15%.

“We had a hard job in the Chamber to show that, even in Europe, treatment is different, and we managed to raise awareness. Now it’s a new battle, let’s take the data, look for the rapporteur and the Minister of Tourism to show that this stage also needs be very careful,” says Bielawski.

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How is VAT for the restaurant sector in Europe

• Italy
  22% standard VAT
  10% VAT on alcoholic beverages in bars and restaurants and take-away food
  5% VAT for food
• Portugal
  23% standard VAT
  13% VAT for food segments, food in bars and restaurants
  6% VAT for food segments
• Spain
  21% standard VAT
  10% VAT for food, takeaway, bars, restaurants and nightclubs
  4% VAT for food segments
• Netherlands
  21% standard VAT
  9% VAT for food segments, restaurants (excluding alcoholic beverages), bars, cafes, takeaways and nightclubs
• Ireland
  23% standard VAT
  13.5% VAT for food segments
  9% VAT for food segments, takeaways, bars, cafes, restaurants (except drinks)
• Sweden
  25% standard VAT
  12% VAT for food, non-alcoholic drinks and takeaway food segments
• Hungary
  27% standard VAT
  18% VAT for food and accommodation
  5% VAT for restaurants and buffets

_{Source: National Association of Restaurants survey; reductions include other sectors and services}