Tax reform: credit refund will depend on payment of tax in previous stages

The appropriation of credit by a company under the new tax regime will be conditional on the collection of taxes by suppliers in the previous stages of the production chain. The rule is part of the complementary bill (PLP) 68/2024 — which details how the future system of collecting taxes on the consumption of products and services will work.

Furthermore, the PLP states that the appropriation of credit will depend on proof of the transaction through an electronic tax document. Superintendent of Economics at the National Confederation of Industry (CNI), Mário Sérgio Telles, says he agrees with the condition for the appropriation of credit by companies as long as the split payment is implemented.

“Split payment is the collection of direct tax for the Federal Revenue Service and the IBS Management Committee at the time a company makes payment to its supplier. If this mechanism is in force, the company’s only obligation will be to pay its supplier. Under these conditions, we agree to this link.”

Rapporteur of the text in the Chamber of Deputies, Reginaldo Lopes (PT-MG) says that companies do not need to worry about whether their suppliers have paid taxes to the tax authorities, because the split payment mechanism, which separates the value of the product from the value of the tax, will guarantee collection.

“We are going to reduce the tax burden from 35% to 26.5% because we are going to put an end to fraud and default. As we have created the intelligent, manual and simplified split (payment), we are protecting the acquirer, so that the acquirer has his credit preserved and it is through payment. If he distrusts the supplier, he pays directly to the Federal Revenue or to the Management Committee. This is preserving credit and reducing the tax burden based on that thesis: when everyone pays, everyone will pay a lower tax burden.”

Telles believes that the measure will also bring benefits to the productive sector. “Fighting tax evasion is positive both for competition between companies — those that pay their taxes correctly and do not want to compete with those that do not do so correctly — and for ensuring that credit balances can be paid quickly, because then the tax authorities will be returning a tax, in the form of credit, that they actually received.”

A short period of time for taxpayers to receive the balance of taxes they have already paid is essential for business growth, according to Telles. “By receiving credit balances more quickly, the cash flow problems of many companies are improved, because today they spend years waiting to receive billions of reais in tax credits,” he says.

Understand

In the new system, the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS) — which form the Value Added Tax (VAT) — will be levied on each operation in the production chain, generating tax credits for companies that acquired goods or services along the chain.

Imagine a 30% VAT on a vehicle production chain. A mining company, for example, sells R$100 worth of iron ore to a steel mill. With tax, the value will be R$130. The steel mill, in turn, transforms the iron ore into steel and sells the product for R$200 to a car manufacturer. Due to VAT, however, the final price will be R$260.

When collecting the tax, the steel company can deduct the R$30 in VAT that it paid when purchasing the iron ore from the mining company — this is the tax credit — so that it only has to pay R$30 to the tax authorities.

The logic is that all companies involved in the production chain of manufacturing and selling the vehicle can be credited, with the final consumer therefore being responsible for the actual payment of the price of the product, plus VAT.

According to the rule that links the refund of the credit to the payment of VAT on previous transactions, in the example above, the steel company will only be able to appropriate the credit if the mining company has collected the tax due.

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