Subsidies MP and new JCP go to vote “dehydrated”

Provisional measure (MP) 1,185/2023, the Ministry of Finance’s main bet to increase federal revenue next year, should be voted on this Thursday (14) in a joint committee of Congress.

In a report on the matter presented by federal deputy Luiz Fernando Faria (PSD-MG) on Wednesday (13), the text, which affects federal taxation on state subsidies, also included changes in Interest on Own Capital (JCP ).

In both cases, the new text was “dehydrated” in relation to the intentions of the government of Luiz Inácio Lula da Silva (PT). The subsidy MP should not guarantee revenue as high as expected, and the new rule for the JCP was much more lenient than the Treasury wanted.

In general terms, MP 1,185 provides that companies taxed on real profit and that have ICMS tax incentives from state governments for investment purposes will receive IRPJ tax credits instead of deducting exemptions from the IRPJ and CSLL calculation base. , as occurs today. Furthermore, it allows the Union to tax subsidies that are used only for funding and are not linked to investment.

Edited on August 30th, the MP received a vote from Faria for approval, but with a total of 13 changes, including the extension of the period for subsidies subject to the benefit, the reduction of the period for the Revenue to analyze the eligibility of companies and the extension of the possibility of generating tax credits to the goods and services trade sector.

“The same tax credit that would apply to others, we include commerce. For example, a supermarket chain is going to make an investment or expansion, it will be able to benefit from the credits, as will the industry”, said the deputy while reading the report.

He also increased to 80% the maximum discount that can be given to companies in negotiations for amounts not collected in recent years. The Ministry of Finance had proposed a reduction of up to 65% during negotiations with Congress to unlock the vote on the MP.

Based on a decision by the Superior Court of Justice (STJ), the department understands that it could retroactively charge all federal taxes that were no longer paid by legal entities on revenues obtained from the reduction of state taxes.

Faria also said that he had made it clearer that federal incentives granted to companies located in the Manaus Free Trade Zone and in the areas of activity of the development superintendencies of the Amazon (Sudam) and the Northeast (Sudene) are preserved.

Among other modifications to the text made by the rapporteur, an adjustment to the tax treatment given to road passenger transport was proposed, in order to make it equal to that enjoyed by air transport.

The MP is considered a priority among the government’s economic agendas that depend on approval by the Legislature later this year. Initial estimates indicated that the changes could generate R$35 billion in additional revenue in 2024, which would help with the challenge of closing public accounts in balance, as dictated by the fiscal target.

Faria’s report does not present an estimate of potential revenue after the changes.

Rapporteur includes changes to JCP and offshores

In addition to the changes promoted in the main theme of the proposal, Faria included changes in the JCP in his text, meeting another demand from the Minister of Finance, Fernando Haddad. The rapporteur’s version, however, also dehydrates the government’s initial proposal, which predicted an increase in revenue of up to R$10.4 billion with the end of the instrument’s deductibility.

JCP is a form of distribution of profits among shareholders that can be treated as an expense in the company’s results. Therefore, it is used by companies to reduce the IRPJ and CSLL tax base, generating less revenue for the Union.

The deputy’s proposal maintains the deductibility provided for by law, but limits what can be considered for JCP purposes. According to the opinion, only resources referring to the paid-in share capital (transferred to the company’s activities), capital and profit reserves provided for by the law of Joint Stock Companies (SAs), in addition to shares in treasury and the amount referring to the recorded profit.

Positive variations in net equity resulting from corporate acts between dependent parties that do not involve the effective transfer of assets to the legal entity are no longer considered.

The report also includes provisions that change the law on offshore companies, also sanctioned on Wednesday by Lula. One article, for example, allows individuals with assets abroad, but outside a tax haven, and with their own active income above 60% of the total to opt for automatic annual taxation of profits. Originally, taxation in this modality would necessarily occur when profits are made available.

The vote on Faria’s report to the MP in the joint committee was scheduled for Wednesday, but there was a request for a collective view and the text is expected to be analyzed this Thursday from 2:30 pm. If approved, the proposal will go to the plenary sessions of the Chamber of Deputies and the Senate.