Government works for the approval of the tax reform until Friday (7), says Padilha

“We want to work together with the leaders of the Chamber so that we can complete the vote this week. Every effort by the government must be in the sense of supporting this disposition of the president of the Chamber and the rapporteur of the GT (Work Group)”, he said .

On Sunday night (2), the President of the Chamber of Deputies, Arthur Lira, met with party leaders. Lira said that the collegiate decided to suspend meetings of thematic commissions, CPIs and formal sessions, starting this Monday, so that the tax reform and other economic agendas can be put to the vote until Friday (7).

“The time has come for us to take a leap forward and approve a new tax legislation that Brazil deserves,” said the president of the Chamber in his profile, on a social network.

On the 22nd, federal deputy Aguinaldo Ribeiro (PP-PB) presented the preliminary version of the substitute for the Proposed Amendment to the Constitution (PEC) 45/2019, which deals with the reform of the tax system.

The purpose of the text is to simplify the system for collecting taxes on the consumption of goods and services in the country. To this end, the rapporteur proposes the unification of the five taxes on consumption by a dual value added tax (VAT). Union taxes (IPI, PIS and Cofins) would give rise to the Contribution on Goods and Services, the CBS, while the ICMS, under the responsibility of the states, and the ISS, under the responsibility of the municipalities, would form the Tax on Goods and Services, the IBS.

The proposal projects an 8-year transition from the current to the new tax system. Another transition that the substitutive brings is the one in which the incidence of the tax is changed from the origin of the product or service (where there is manufacturing) to the destination (where there is consumption by people). The PEC suggestion is that the change will take 50 years.

The text also creates the Regional Development Fund (FDR), whose objective is to compensate the states and municipalities that, today, reduce taxes to attract investments, which will be unfeasible with the adoption of the principle of taxation at destination. The Union is willing to finance the FDR in up to R$40 billion from 2032, but the states want more.

Negotiation

Part of the governors and mayors remain reticent with the reform along the lines proposed by the rapporteur, as well as representatives of some sectors of the economy, mainly services, who fear an increase in the tax burden on some segments.

Despite this, Padilha stated that “there is quite broad support in favor of the reform” and that the government will “continue the dialogue with governors, mayors and society”.

Environment has never been so favorable for tax reform, says expert

Tax reform has different rates for VAT and 8-year transition