Tax reform: rapporteur suggests evaluating tax incentives every five years

[ad_1]

Eduardo Braga (MDB-AM) must present a report by the end of this month. Discussion about sectors entitled to differentiated taxation is one of the most sensitive points. Senator Eduardo Braga (MDB-AM), rapporteur of the tax reform in the Senate WALLACE MARTINS/FUTURA PRESS/FUTURA PRESS/ESTADÃO CONTÚDO The rapporteur of the tax reform in the Senate, Eduardo Braga (MDB-AM), suggested including a review in the proposal, every five years, of incentives granted to some sectors of the economy. The discussion about segments that are currently entitled to differentiated taxation is one of the sensitive points of the proposal being analyzed by Congress. The text was already approved by the Chamber in July and should be voted on by the Senate in November. In an interview, Braga said that he has not yet discussed the idea with the Chamber, which will have to re-analyze the proposal if the Senate makes changes to the text that received the approval of deputies. He also highlighted that the Senate approved, in July, a project that establishes the need for periodic evaluation of tax incentives, with the possibility of renewal. According to the text, subsidies would be evaluated by economic, social and environmental performance goals, among others. The project, however, did not advance in the Chamber. “The Senate has a consensual opinion regarding the assessment, every five years, of tax benefits. It is easy to reproduce this within the PEC, but does it have support in the Chamber? I don’t know, it has not been discussed with deputy Aguinaldo Ribeiro [relator da reforma na Câmara] or with President Arthur Lira”, said senator Eduardo Braga. The rapporteur’s suggestion is a little different from what was proposed by the Federal Audit Court (TCU), for example. The idea of ​​the Court of Auditors foresees the review in 2034 of the list of exceptions to the general rate – that is, the sectors that may pay less taxes. In the case of Eduardo Braga’s proposal, the evaluation would be recurring, every five years. Braga’s expectation is to present his report on the tax reform PEC by October 24th, with a vote in the Constitution and Justice Commission (CCJ) and in the Senate plenary between November 7th and 9th. Braga did not say whether the suggestion about reviewing benefited sectors will be included without his report. Tax reform: the text’s rapporteur detailed the voting schedule in the Senate Understand the discussion The tax reform proposal approved by the Chamber of Deputies provides that some sectors will not need to pay the general rate. The exceptions are divided into three groups: reduced charge, equivalent to 40% of the so-called “standard rate” that will apply to other sectors; zero rate, on items such as those in the basic food basket, for example; or specific regimes, with a different charging format, for sectors such as finance, real estate and fuel. In August, the Ministry of Finance reported that these exceptions, approved by the Chamber of Deputies in the tax reform, should increase the future Value Added Tax (VAT) to up to 27% – one of the highest rates in the world. This conclusion was confirmed by the Federal Court of Auditors. See the sectors with reduced rates in the tax reform urban, semi-urban or metropolitan public transport services; medicines and medical devices and health services; education services; fresh agricultural, fishing, forestry and plant extractive products; agricultural inputs, food intended for human consumption and personal hygiene products; and national artistic and cultural activities; journalistic, audiovisual and sports productions; medical and accessibility devices for people with disabilities; goods and services related to national security and sovereignty, information security and cybersecurity; and medicines and basic menstrual health care products. Tax reform Discussed for decades and long awaited by the productive sector, the topic is considered a priority by the Lula government to bring Brazilian rules closer to the rest of the world and reform a system that is considered chaotic by businesspeople and investors. Analysts estimate that the tax reform on consumption has the potential to increase Brazil’s potential GDP by at least 10% in the coming decades. In general terms, the initial proposal establishes the extinction of five taxes: IPI, PIS and Cofins (federal); ICMS (state); and ISS (municipal). Instead, two Value Added Taxes (IVAs) would be created — one managed by the Union (CBS), and the other with shared management between states and municipalities (IBS), in addition to a selective tax, on products harmful to health, such as cigarettes and alcoholic beverages. With the implementation of VAT in Brazil, taxes would become non-cumulative. This means that, throughout 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.

[ad_2]

Source link