Businesspeople have a positive reaction to the tax reform report

Report from Valor Econômico showed that the business community's reaction to the Tax Reform report, presented this week, was positive. The newspaper highlighted an assessment by Dr. Eduardo Lourenço, partner at Maneira Advogados, regarding the matter.

Businesspeople have a positive reaction to the tax reform report; but demand clarity about impacts

June 9, 2023

Production sector complains that it wants details on how the proposed changes will impact each area of the economy

By Raphael Di Cunto and Marcelo Ribeiro, Valor — Brasília

In general terms, the tax reform report, with the guidelines that will guide the drafting of the legal text, was well received by the productive sectors, mainly in relation to the improvements in the use of tax credits and the possibility of more than one rate for the future Value Added Tax (VAT). The main complaint, among businesspeople, was already expected since deputy Aguinaldo Ribeiro (PP-PB) informed that the opinion of the Chamber's working group would not contain the text of the proposed constitutional amendment (PEC): there is a lack of clarity about the impact on each sector of the economy.

For lawyer Eduardo Lourenço, partner at Maneira Advogados, the report brought some advances, such as the refund of credits within 60 days and without making them conditional on prior payment by the supplier, but the most important issue is knowing the text of the PEC. "What does the tax treatment of food and the agricultural sector actually look like? In fact, we have to know not only the constitutional text, but the infra-constitutional ones as well", he said.

Vice-president of the Confederation of Commercial and Business Associations of Brazil (CACB) and president of the entity's legal committee, Anderson Trautman also states that “there is no way to approve the PEC without looking into the regulations” first. "What is laid out is a plan of intentions. As a lawyer, I can say that the complete analysis of the legislator's intention can only be seen in the legal text."

Trautman highlights that there has been progress in the generation of credit by Simples companies, but that attention is needed. The report indicates that it will be allowed to continue with the unified collection of taxes and generate credits in a value that would be equivalent to that of VAT, or go to the general taxation regime and collect VAT, with greater generation of credits, “without prejudice to continuing in the simplified regime in relation to other taxes”. This, according to the rapporteur, would allow the company to evaluate which option is most advantageous, depending on where it is in the production chain.

Trautman, however, considered that, depending on the way this is written in the PEC, it could end up forcing Simples companies to leave the regime and migrate to another in which they will pay more taxes, with greater credit generation for their contractors. "Saying that the company can choose is relative. It could be a market issue, which is beyond its control, the customer no longer wanting to buy from it because it generates little credit being on Simples", he said.

Deputy Luiz Gastão (PSD-CE), president of the Ceará Commerce Federation (Fecomércio), stated that the basic text presented is “very worthy” as it allows more than one rate for VAT, a tax that will replace PIS, Cofins, IPI, ICMS and ISS. "But we want to ensure that there is no increase in the tax burden for the services sector and for the end consumer. I will defend that there is a limit parameter in the PEC, that the basic rate cannot be higher than such a value", he commented.

Executive director at the Brazilian Dairy Association (Viva Lácteos), Gustavo Beduschi highlighted that even the published guidelines concern his sector. "The report suggests the possibility of maintaining differentiated treatment for products in the basic food basket and for rural producers, but it does not talk about food as a whole. In the case of milk, we are obliged by law to industrialize, no one sells it fresh, so there may be an increase in prices depending on how it goes", he pointed out.

Another point that needs to be better defined in the PEC, in Beduschi's opinion, are the goods and services on which the Selective Tax (IS) will be levied. The report states that they will be those “harmful to health and the environment”. "This is a blank check, it's a very vague term to leave the definition to a complementary law. The egg, for example, which is not industrialized. How many studies have you seen, sometimes saying that it is bad for your health, sometimes saying that it is good? There is room to tax extra or not based on this wording."

The president of the National Confederation of Financial Institutions (CNF), Rodrigo Maia, said that it is necessary to wait for the legislative text, but that the guidelines are on the right track. “The CNF sees the presentation of the GT report as positive and awaits the presentation of the text of the PEC”, he stated.

https://valor.globo.com/politica/noticia/2023/06/09/empresarios-tem-reacao-positiva-ao-relatorio-da-reforma-tributaria-mas-cobram-clareza-sobre-impactos.ghtml