VAT rate may exceed 30%, says Ives Gandra

The rate of the dual Value Added Tax (VAT) that will be created by the tax reform may exceed 30%, according to jurist and tax specialist Ives Gandra da Silva Martins. The rate is much higher than that predicted by the Extraordinary Secretary for Tax Reform at the Ministry of Finance, Bernard Appy, of 25%.

Initial calculations were based on the premise that all sectors and companies would have the same tax burden over a ten-year transition period. But, according to Ives Gandra, the exceptions granted in the PEC by parliamentarians to various sectors of the economy and the institution of compensation funds for states harmed in the transition to the new system will inevitably result in a higher standard rate.

Bernard Appy denies that the rate will exceed 30%. The Institute for Applied Economic Research (Ipea), an arm of the Ministry of Planning, estimated in a study released in mid-July that the rate will reach 28%.

To approve the reform, the Union committed to finance the FDR (Regional Development Fund) with a contribution of R$ 8 billion in 2029 and gradual increase, until reaching R$ 40 billion from 2033, in values ​​corrected for inflation.

This means, explains Ives Gandra, that it is already known that there will be states that will win and states that will lose. “If someone is going to lose and be compensated, that means the taxpayer is going to foot the bill,” he says.