How to prepare for the new rules

How to prepare for the new rules

By Andrea Penna, special for Monitor

The president of the Federation of Industries of the State of Rio de Janeiro (Firjan), Luis Cesio Caetano, stated that the proposal for a new tax reform is “a significant advance, because it can reestablish competitiveness and development in Brazil, in addition to reducing inequalities, but structuring reforms are also needed, such as administrative reforms, and greater efficiency in public spending.”

He envisioned that "in 2033, with the implementation of the Brazilian reform, we will have a fairer and more competitive country, reducing inequalities. It will eliminate distortions as it will promote the elimination of deficiencies. It will be crucial and will play a decisive role in promoting national companies, production and sustainable development."

Caetano addressed the business panorama and the proposals being debated by the Federal Government and the National Congress when opening at Firjan the event “Challenges of tax reform: how to prepare for the new rules”, which also included Bernard Appy, extraordinary secretary for Tax Reform at the Ministry of Finance; Eduardo Maneira, professor of tax law at the National Law School of the Federal University of Rio de Janeiro (UFRJ); Robson Lima, national manager of the strategic tax reform project at the National Data Processing Service (Serpro); and Luiz Dias Alencar Neto, general coordinator of the National Meeting of State Tax Coordinators and Administrators (Encat).

For Bernardo Appy, "we have currently reached a level of distortion that compromises development, in addition to the cost and legal uncertainty. Our system taxes investment, and because of this we have lost growth potential. Production in Brazil was organized according to the system, but the distortion is harmful. By migrating to the new model, we will have an impact on growth. It will be greater than 10%, with some studies pointing to 20% growth. The bulk of the effects will appear in 15 years, and the power of purchase could be 10% higher. It’s a very relevant impact!”.

Appy commented on how understandings are being organized between the three spheres - federal, state and municipal, "and we will need a Complementary Law. It was the way found to make tax reform viable." He explained that a new reform will affect federal taxes in 2027, and between 2029 and 2032, there will be a transition to state and municipal taxes. To this end, he said, “shared management was created through the IBS management committee for states and municipalities”. He also warned companies: "it is important that they organize themselves and adjust their business model. Those who are not prepared are already behind."

During the debate Appy also stated that the country has the highest tax burden in the world and without any transparency, “as the note does not contain any information about taxes”, but that the new reform promises transparency and will be a “key turning point”.

Luiz Dias Alencar Neto, general coordinator of the National Meeting of State Tax Coordinators and Administrators (Encat) said that the Management Committee is a Brazilian invention, which is a precaution so that “no one loses out in this transition period”. He highlighted that there will be a single legislation "that will replace the complexity of countless legislations, resolutions, standards, etc. The transition is the price to pay to have a new tax reform. And it is important to test, the work will be gigantic." He said that “if the Brazilian model is successful, it will be an international reference”.

Transparency

Robson Lima, national manager of the Tax Reform strategic project at the National Data Processing Service (Serpro), guaranteed that "with the single reform portal, everyone will be able to monitor the transparency of taxation. "Your relationship with the tax authorities will change completely, your relationship with the entrepreneur will improve. We will have a completely new ecosystem, to guarantee taxpayers services from Serpro and the Management Committee. It will simplify the relationship with the tax authorities. At the end of the debate, Lima said that a tax calculator is being created to carry out simulations, and that on July 1st some companies will carry out tests using the gov.br platform.

Second instance

“After economists master the topic, it’s time for lawyers to step in,” said Eduardo Maneira, professor of Tax Law at the National Law School of the Federal University of Rio de Janeiro (UFRJ). He explained that currently there is the possibility of the same fact generating two actions, and that Complementary Law 108 could unify administrative disputes and resolve this issue. “The CNJ is considering the creation of a second legal instance to standardize solutions”, he added.

On the legal issue, Bernardo Appy says that there will be two ICMSs, to make life easier for the taxpayer, and that if there are legal differences, "the one that is most favorable to the taxpayer will be valid, harmonization with representatives of the municipal, state and federal spheres to resolve and make life easier for the taxpayer. The model will benefit the good payer and make life more difficult for the bad payer. And thus there will be a reduction in fraud and evasion."

In his final considerations, Bernardo addressed the progress of the reform in Congress, and said that the transition will be implemented gradually, and "for companies, the new reform will finish being implemented in 2033, with a positive impact on reducing regional inequalities when less developed states, and also Brazilian municipalities, will benefit most. Today, the difference is 200 times and this will fall to 15 times with the new reform."

The second panel this Monday morning at Firjan, “Post-reform industrial competitiveness”, featured federal deputy Pedro Paulo who guaranteed that there was “balance within the council of managers, between large and small municipalities, and on the debates being held in the Senate”. “The Chamber may or may not accept the changes that will be made at this stage.” Asked about the administrative reform, Pedro Paulo said he will present a report to Mayor Hugo Motta on July 14th.

Ideology and politics

For Fabio Gianbiagi, the tax debate is usually contaminated by the ideological vector and the political vector. He criticized the increase in resources for programs such as Bolsa Família and Fundeb, the increase in the Income Tax exemption range, and highlighted the deficit in public accounts, "it is the Brazilian government's heel. But he stated that the Tax Reform "is spectacular".

Closing the event, the president of Firjan recalled that the entity has advocated structural reforms to generate employment and income since 1997, and that “the growth of the economy still depends on these reforms”, and therefore the search for solutions to structural problems is essential”. He criticized the rigidity with mandatory resources, such as personnel expenses, penalizing municipalities that are unable to make investments.

https://monitormercantil.com.br/como-se-preparar-para-as-novas-regras/