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The Advancement of the Movement Is Crucial for the Progress of the Tax Reform, Expected to Be Realized in 2024, After the Approval of the PEC by the National Congress, and Represents a Major Milestone in the Political and Economic Landscape of the Country. The Integration of the Movement into the Legislative Agenda Is Essential to Achieve the Necessary Changes in the Brazilian Tax System.
Secretary Bernard Appy Suggested the Possibility of Creating a Project in Collaboration with Other People. There Are Already Some Informal Contacts on This Matter, but as Soon as the PEC Is Approved, We Will Formalize the Invitation for a Joint Partnership.
He Believes That the Version Being Agreed Upon Between Deputies and Senators Is a Positive Step to Address the Main Issues Involving Subnational Entities. This Will Facilitate the Creation of a Joint Project. This Partnership Aims to Facilitate the Process of Constructing the Text.
The Secretary Also Revealed That Significant Progress Is Being Made in Formulating the First Supplementary Bill Mentioned, However, the Federal Government Is Waiting for the Completion of the Legislative Process of the Tax Reform to Proceed with the Next Steps.
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‘In the Most Important of These, Which Establishes the Regulations for the New Taxes, We Are Already Doing Internal Work, However, We Are Waiting for the Approval of the PEC to Call on the States and Municipalities to Collaborate with Us in This Process’, He Stated.
Taxes on Extractive Activities
In the Case of Extraction Operations, the Tax Will Be Applied Regardless of the Final Use of the Product, with a Maximum Rate of 1% of Market Value – a Measure Comparable to the Royalties Charged in the Oil Sector and the Financial Compensation for Mineral Exploration (CFEM) Applied to the Mining Industry.
Appy Also Highlighted the Need to Address, Through a Supplementary Law, the Issue of Accumulated Creditor Balances of ICMS and PIS/Cofins. However, He Believes That “Very Probably” This Matter Could Be Addressed in the Text that Deals with the New Taxes. However, Since He Refers to Old Taxes, It Does Not Necessarily Have to Be in the Same Document.
The Content Also Establishes the Taxation of Weapons and Ammunition, Except When Intended for Public Entities. In Addition, It Establishes the Prohibition of Double Taxation and the Exclusion of the Tax from Its Own Tax Base, in Accordance with the Principle of Charging Externally. The Tax on Services (IS) May Share the Same Origin and Tax Base as Other Taxes and Will Have Its Rates Determined Through Ordinary Legislation, Which May Be Specific, Based on the Unit of Measure Adopted, or Ad Valorem.
A Third Proposal for a Supplementary Law Is Expected to Regulate the Selective Tax, a Tax Aimed at Influencing Social and Environmental Behavior, Not Just for Revenue Collection. This Tax Will Be Collected on the Production, Extraction, Sale, or Importation of Goods and Services Harmful to Health or the Environment.
In This Case, the Approved PEC Already Establishes Guidelines for Implementing This Tax, with the Exclusion of Taxation on Exports and on Operations Involving Electricity and Telecommunications. **These Measures Aim to Emphasize the Importance of Protecting the Environment and Public Health, as Well as Encouraging More Responsible Business Practices.**
A Second Supplementary Legislation Should Address the Operation of the Management Committee − a Committee Composed of Representatives from States and Municipalities, Tasked with Managing the IBS, Which Will Replace the ICMS and the ISS After a Transition Period.
However, the Secretary Explains That the Government Has Not Yet Decided Whether to Participate in the Initiative to Draft a Text or Leave This Task to the Subnational Entities Themselves. “Since This Is **a Tax** of the States and Municipalities, It May Make More Sense for the Supplementary Legislation to Be Drafted by the Entities − More So Than by the Union,” He Suggested.
Projects of Supplementary Laws to Regulate Points of the PEC
According to the Secretary, At Least Three Projects of Supplementary Laws Will Be Sent to Regulate the Points Provided in the PEC. The Main One, According to Him, Will Address the New Taxes of the Dual Value-Added Tax (VAT) Model Implemented.
“It Will Address All Sector Issues, Tax Base of the New Tax, Trigger for Payment, Tax Base, Exemptions, All Specific Regimes. There Will Be a Clear Definition of the List of Products and Services Subject to a Reduced Rate, Along with Criteria for Distributing the Revenue to States and Municipalities, as Well as the Compensation Mechanism for the Tax,” He Clarified.
It Is Expected That the Projects of Supplementary Laws Will Provide Clarity and Details on the Implementation of the PEC, Addressing the Regulatory Needs of the Proposed New Tax Model.
During the Interview with InfoMoney, Appy Mentioned That the Ministry of Finance Is Already Drafting the Texts of the Projects and That the Intention Is Not to Use the Full Period of 180 Days Established by the PEC (From Its Approval) to Submit Them for Review by the National Congress. “The Congress Established This Deadline, but Our Goal Is to Send It Earlier”, He Stated.
He Revealed That Initially He Thought He Could Submit All the Projects Right at the Beginning of the Legislative Work in February of Next Year, but He Currently Admits the Need for a Slightly Longer Deadline. “It Is Extensive Work, We Have Made Significant Progress, but There Is Still Much Work to Be Done − Including in Terms of Coordination with Other Levels of Government,” He Emphasized.
The Government Should Not Get Involved in Possible Disagreements Between the Two Houses of the National Congress. If They Arise, It Is an Issue That Should Be Resolved Among Them. It Is Crucial to Have a Dialogue Between the Two Houses During the Final Phase of Passage Through the Chamber and Approval of the PEC,” He Emphasized.
For the Rules to Come into Effect After the Approval of the Constitutional Amendment by the Legislative Power, It Is Necessary to Regulate Various Points Mentioned in the Text. According to the Version Approved by the Senators, There Are More Than 90 Mentions of a Supplementary Law That Must Be Created to Detail Issues Such as the New Taxes to Be Instituted − the Tax on Goods and Services (IBS), the Contribution on Goods and Services (CBS) and the Selective Tax (IS) − and Their Rates, the Special Regimes for Specific Sectors of the Economy, the Transition Rules, Accumulated Credits, Among Others.
The Person Responsible for the Tax Reform at the Ministry of Finance, Bernard Appy, One of the Creators of the Original Proposal, Believes That the Two Legislative Houses Can Reach an Agreement and Approve the Text Before the Parliamentary Break.
For Him, The Indications Provided by the Rapporteur in the Chamber of Deputies, Aguinaldo Ribeiro (PP-PB), Are Favorable for This Outcome. However, He Remains Distant from Political Negotiations. **“In Fact, Who Will Define the Strategy Is Congress Itself. Our Role in This Process Is to Provide Our Opinion, from a Technical Point of View, on Any Issues They Want to Adjust”**, He Stated to InfoMoney.
Tax Reform of Consumption Taxes under Review
The Government Led by Luiz Inácio Lula da Silva (PT) Expects That the National Congress Finalizes, Still in 2023, the Review Process of the Proposal That Deals with the Tax Reform of Consumer Taxes (PEC 45/2019) and Is Already Planning the Next Steps to Regulate the Points Provided in the Constitutional Amendment.
The Text, Approved Two Weeks Ago by the Federal Senate, Will Need to Go Through a New Review in the Chamber of Deputies, as It Underwent Changes During Discussions in Parliament. Since It Is a PEC, It Is Necessary for the Two Legislative Houses to Vote on the Same Version Regarding the Content, with the Support of at Least 3/5 (That Is, 308 Deputies and 49 Senators), in Two Rounds of Voting, for It to Be Approved.
Source: InfoMoney
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