Tax reform: group defines location for charging goods – 02/17/2024 – Market

The home of the buyer of high-value goods — such as passenger vehicles, tractors and trucks — must be considered the location of the destination to which the new tax will apply, in accordance with the tax reform regulations being prepared by the Ministry of Finance.

The topic was discussed internally and the definition considers international experience, according to government members familiar with the negotiations heard by the Sheet. The solution is adopted by countries like the United States, for example.

The question that the members of the discussion groups asked was the following: should the buyer’s place of residence or the location of the store be adopted as the destination?

For purchases made in person in supermarkets, the tendency is that, even for simplicity, the destination is the location where the store is.

The destination of fuel sales must also be considered the supply location, which tends to favor larger cities.

For durable goods, however, the rule must be different, as in this case it is easier to identify the address with the buyer’s CPF.

This definition is a central theme in the regulation of the reform because the constitutional amendment transferred the taxation of taxes from the origin (where they are produced) to the destination location (where they are consumed).

In other words, the taxes that will be created by the reform will be due in the destination locations. Therefore, the definition of what will be considered a destination for goods and services will be fundamental for the collection of municipalities and states.

Municipalities, for example, can lose or gain revenue if their residents buy products in the neighboring city. The same can happen with states.

Representatives of regional governments expressed concern about this issue at the inaugural meeting of the regulatory work, as revealed by the Sheet on January 24th.

A technical advisory program for the implementation of the reform was created at the beginning of January, with 19 thematic technical groups and another for legal analysis.

A systematization commission, coordinated by the extraordinary secretary for Tax Reform, Bernard Appy, will summarize the proposals and define the general scope of what will be presented to Minister Fernando Haddad (Finance) and sent to Congress.

The reform enacted by Congress at the end of last year establishes the operation in Brazil of the so-called dual VAT (Value Added Tax), with two new taxes to be created: the federal CBS (Contribution on Goods and Services); and IBS (Taxes on Goods and Services), from states and municipalities.

But it is the regulation that will define the parameters for the operation and collection of the two taxes. The government is preparing three projects to be sent to Congress between the end of March and the beginning of April.

One point under discussion is the taxation of intangible assets (which do not have a physical form), such as brands, franchises, copyrights, patents and customer portfolios.

Government people involved in the negotiations say that complementary laws need to have text that makes it very clear how all goods and services will be taxed to guarantee legal certainty. There needs to be little room for subjective interpretations that open up disputes.

The operational details will be defined, however, in infra-legal standards, because in the opinion of the technicians who participate in the regulatory work, there is no way to leave these points in the laws.

As shown by Sheetthe president of the Chamber, Arthur Lira (PP-AL), and allies from the centrão parties want to vote on regulatory projects to take away power from the Revenue and Tax Authorities of states and municipalities.

It is planned that the texts will leave Congress without needing infra-legal standards, such as the IRS’s INs (Normative Instructions).

“The role of the Tax Authorities in the tax reform will not be ancillary. It is they who will put the tax system on its feet, the machine. What we are doing is far from being an improved ICMS”, says Rodrigo Spada, president of Febrafite, an association that brings together state tax inspectors.

For him, this attempt to remove the power of the Tax Authorities “goes against” the tax reform itself.

“It could even be another attempt by some parliamentarians, who did not defend the reform, to delay the discussion. To want to create divergence. It’s a small game”, says Spada.

According to him, the movement to weaken the Tax Authorities, like this, will not prosper. Spada says there is no way to put the new system in place without these bodies defining the operational standards.