Tax Reform: GT coordinator in the Chamber says Dual IVA should prevail in the final report

The parliamentarian explained that most municipalities want Dual IVA and that some of the governors who want a single IVA would not oppose the other alternative. When asked if the Dual IVA option was closed, Lopes replied: “practically”.

“It’s bad to talk like this (that Dual IVA will be chosen), because we will still approve it in the GT, in the college of leaders. But what have I been saying? There are governors who prefer single IVA and there are governors who prefer IVA Dual. Those who prefer single IVA do not veto Dual IVA. Whatever. They want a single legislation. So, if you have a pro Dual IVA amplitude and most municipalities want Dual IVA, you reason: if it is a convergence proposal and seeks everyone to be together in the reform, assumes, then, that it will be Dual IVA”, he detailed.

Understand

Two proposals on tax reform are at a more advanced stage in the National Congress. The Proposed Amendment to the Constitution (PEC) 45/2019 proposes the unification of five consumption taxes, three from the Union (IPI, Cofins and PIS), one from the states (ICMS) and another from the municipalities (ISS). They would give rise to a tribute similar to the VAT that exists in around 170 countries. In the Senate, PEC 110 is being processed, which also suggests simplification.

The main difference between the Senate’s PEC and the text that is in the Chamber is the possibility for states and municipalities to have their own VAT. In this way, federal taxes would give rise to federal VAT and ICMS and ISS to subnational entities’ VAT. Therefore, Dual VAT.

The IVA Dual finds support among mayors and part of the governors because it gives more autonomy over the collection of these entities.

Differentiated treatment

Deputy Reginaldo Lopes also stated that there are still ongoing negotiations to define which sectors will receive differentiated treatment in the tax reform, that is, who will have a lower tax rate in relation to the others. However, he advanced some segments that should count on exemption.

“We have to treat with care education, health, short-chain agribusiness products, basic food basket, in natura products; you have the issue of public transport, cargo transport, all are sectors that we are studying how the rate will be applied and what is the differentiated treatment that we are going to do.”

Timeline

According to the parliamentarian, the final report of the Tax Reform WG will be released next Tuesday (6). Next, the group plans to meet with party leaders for two weeks to discuss the text. The expectation is that federal deputy Aguinaldo Ribeiro (PP-PB), rapporteur for the reform in the Chamber of Deputies, will present the substitute for the proposal around June 20.

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