Alckmin says that tax reform has to be approved this year, because otherwise it “passed”
“I’m optimistic. I think the tax reform project is mature, it was debated a lot. Reforms have to be approved in the first year. If you lose the first year, it’s over. So, now you have to vote. It’s not a finished and perfect work , but it will help a lot, because it will bring economic efficiency, simplification, help with exports.”
Alckmin pointed out that Brazilian companies are subject to a high tax burden, but that this is not the only problem with the current system. “It’s very complex. If we compare it with OECD data, in addition to the tax burden being high, the cost of paying taxes, the legal uncertainty is enormous. The ICMS, for example, has 27 different laws and more than 200 rates.”
Proposals in progress
In the National Congress, two proposals to amend the Constitution to simplify the tax system are at a more advanced stage. PEC 45, which is being discussed in the Chamber, and PEC 110, which is in the Senate. Both texts aim to unify the various taxes on consumption, such as the Value Added Tax (VAT) adopted in several countries. The main difference between them is that the first unifies the taxes of the Union (PIS, Cofins, IPI), of the states (ICMS) and of the municipalities (ISS) in one IVA. The second unifies Union taxes on the one hand, Union VAT, and state and municipal taxes on the other, VAT on subnational entities.
A working group in the Chamber of Deputies has been discussing the proposals since the beginning of the year. At first, the WG intended to present a report for voting in May, but the expectation now is that deputy Aguinaldo Ribeiro (PP-PB) give his opinion only in June.
Brazil cost
During the event, the Competitive Brazil Movement updated the weight of the so-called Brazil Cost, which reflects, in values, the impact of structural, bureaucratic and economic difficulties on Brazilian companies.
The cost of doing business in Brazil is around R$1.7 trillion, higher than the average for countries that are part of the Organization for Economic Cooperation and Development (OECD). Difficulties related to the payment of taxes, such as the complexity of the system, the high tax burden and their impact on exports, were identified as the second factor that most harms the productive sector and contributes to the Brazil Cost.
By Brasil 61
