Tax reform coordinator sees ‘more convergence’ for a dual VAT

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Federal Deputy Reginaldo Lopes (PT-MG). Pedro Henrique Gomes/g1 The coordinator of the working group that discusses the tax reform in the Chamber, Reginaldo Lopes (PT-MG), said this Monday (29) that there is “more convergence” for the adoption of a Value Added Tax ( VAT) in the dual model. Lopes made the assessment after leaving a meeting with Minister Fernando Haddad (Finance) and the proposal’s rapporteur, Deputy Aguinaldo Ribeiro (PP-PB). Currently, there are two proposals on tax reform pending in the National Congress. They provide for the replacement of five taxes (IPI, PIS, Cofins, ICMS and ISS) by one or two value-added taxes (IVA). ▶️ In the dual VAT proposal, the forecast is to replace five tributes with two taxes – one of federal competence; and another, with shared management between states and municipalities. ▶️With regard to single VAT, the replacement would be full. The five would be unified into one tribute. According to Reginaldo Lopes, at this moment, there is more acceptance for the model with federal, state and municipal division. “You have more convergence for dual VAT (…) [é] better for the model, for agreements, convergences, at this moment, it will end up being the dual VAT”, said the WG coordinator. However, for the rapporteur Aguinaldo Ribeiro, the single VAT would be better for the country, but there is no “problem” in adopting the dual model if “politically it is the way”. This position is similar to that of the Treasury Ministry’s extraordinary secretary for tax reform, Bernard Appy. At a hearing in the Chamber of Deputies in March, Appy argued that it would be better for the taxpayer to have a single tax, but the best model is one that is able to be approved by the National Congress. The rapporteur also explained that there is no consensus among the governors on the subject, but that the National Committee of Finance Secretaries of the States and the Federal District (Comsefaz) is working together with the group to build a unified position among the states. Group opinion The intention of the working group is to present the report next Monday (06), with the guidelines of the proposal. According to rapporteur Aguinaldo Ribeiro, the WG will meet tomorrow (30th) to “start reaching consensus”, including on whether or not to adopt a dual VAT model. With the implementation of VAT in Brazil, taxes would become non-cumulative. This means that, along the production chain, taxes would be paid only once by all participants in the process. Currently, each stage of the chain pays taxes individually, and they accumulate until the final consumer.

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