Tax reform guarantees suspension of CBS and IBS taxes on capital goods
Capital goods – such as machinery, equipment and construction materials – are used to manufacture items for the end consumer. In Brazil, two special incentive schemes for the purchase of capital goods stand out. Reporto – Tax Regime for Incentives for the Modernization and Expansion of Port Infrastructure; and Reidi – Special Incentive Scheme for Infrastructure Development.
Under the current tax regime, companies that adhere to Reporto or Reidi are entitled to a suspension of federal taxes, such as PIS (Social Integration Program) and Cofins (Contribution for the Financing of Social Security) when importing or purchasing capital goods in the domestic market. What the PLP does is ensure that, in the future regime, the incidence of new taxes, such as the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS) will be suspended on these transactions.
Thianne de Azevedo, a specialist in tax and customs law, says that by allowing the IBS — a tax that replaces ICMS and ISS — to also be suspended on the acquisition of capital goods, the bill improves the lives of companies that are currently part of these regimes.
“The text maintains the structure of Reporto and Reidi, expanding their benefits, which currently only cover federal taxes, to include taxes under the jurisdiction of the state and municipal spheres, which is a great victory for their beneficiaries,” he says.
Rapporteur of the bill in the Chamber of Deputies, federal deputy Reginaldo Lopes (PT-MG) justifies the continued suspension of taxes for capital goods regimes.
“The suspension occurs at the time of entry (purchase of the asset), because if the capital asset requires a large volume of tax, you alter the company’s cash flow. If the government is going to return (the taxes), then it is better to suspend”, he says.
Questioning point
The working group that analyzed the regulation of the reform in the Chamber added a section to the project that states that it will be up to an act of the federal government and the IBS Management Committee — formed by representatives of states and municipalities — to define hypotheses in which there will be a suspension of taxes on imports and acquisitions of capital goods in the domestic market, as well as listing which goods will be covered by the measure and the term of the benefit.
Thianne de Azevedo believes that the text aims to expand incentives to more sectors than those covered by Reporto and Reidi. “Unlike Reporto and Reidi, which came with general rules, the project introduced this section, bringing a new incentive that will cover other sectors, but it is not yet fully organized. We will know in this normative act who these actors are that will have this benefit and which goods are covered by it,” she explains.
Tax lawyer and partner owner of GSV Contabilidade, Gabriel Santana Vieira says that the lack of definition regarding the capital assets that will be subject to the suspension of taxes can cause confusion.
“Companies may face difficulties in classifying assets, which could result in different interpretations and unequal impacts among competitors. This lack of clarity and predictability in defining assets eligible for tax suspension may affect the legal security of companies, since, without well-established criteria, there is a risk of litigation and legal disputes, in addition to making tax planning difficult for companies that depend on these regimes for investments in capital assets,” he assesses.
He states that the definition of goods that will be eligible for the suspension of CBS and IBS needs to be well conducted by the government. “It is crucial that the process of defining goods eligible for regimes, such as Reporto and Reidi, be transparent and involve broad dialogue with the productive sectors. This would help mitigate possible distortions and ensure a fairer and more equitable application of tax policies,” he adds.
Tax reform: new system provides guarantees to companies during the transition phase
Processing
PLP 68/2024 is the text that details how the new system for collecting taxes on the consumption of goods and services will work. The bill will now be analyzed by the Senate. If it is approved by the House without changes, it will be sent for presidential approval. If it undergoes changes, it will return to the Chamber of Deputies.
By Brasil 61
