Regulation of the tax reform will be delayed to 2024
The regulation of the first phase of the tax reform, which simplifies taxes on consumption, will be scheduled for 2024, said the extraordinary secretary for Tax Reform at the Ministry of Finance, Bernard Appy. In a virtual event for a bank, he said that, in principle, four complementary bills are planned.
According to Appy, the first project will detail the rules for the future dual Value Added Tax (VAT). The second will create and regulate the Federative Council. The third will deal with the Regional Development Fund, and the last will bring rules for the accumulated credits of Tax on the Circulation of Goods and Services (ICMS), which will disappear to give way to the Tax on Goods and Services (IBS).
Appy said that the government wants to build the projects in partnership with states and municipalities and that local governments will have some room for autonomy, as in the case of the IBS rate, a tax that is the responsibility of state governments and city halls. According to the secretary, local governments may establish IBS rates, higher or lower, by means of a supplementary law. However, if nothing is done, the nationally defined reference rate will prevail.
Regarding the Federative Council, Appy explained that the body, which will define the fiscal and tax policies of local governments by majority of votes and by majority of population in states and municipalities, will be a technical body, without political power. The secretary also informed that the supplementary law will have a distribution formula to allocate IBS resources to local governments.
Regarding accumulated ICMS credits, one of the liabilities that the tax reform will have to resolve, Appy said that payment by states to companies entitled to receive them will be guaranteed for 240 months (20 years). Through tax credits, a company can obtain discounts on the payment of taxes or be refunded because of taxes charged in excess along the production chain.
Chamber approves return of casting vote in trials
The Chamber of Deputies voted and approved the Bill (PL) 2384/23, which governs the results of judgments in cases of a tie in the Administrative Council of Tax Appeals (Carf) and provides for tax compliance within the scope of the Special Secretariat of Federal Revenue do Brasil of the Ministry of Finance and on low-complexity tax administrative litigation.
Thus, the casting vote was resumed in council judgments. The approval of the text is considered a victory for the government, which defends the modality as a tiebreaker.
The casting vote gives double weight to the position of the chairman of the session, who is always a representative of the Treasury. Thus, the tendency is for the tiebreaker to be favorable to the Union. The proposal goes to vote in the Senate.
New Income Tax table: new simplified discount is already in effect
Starting this year, Brazilian taxpayers will benefit from a new Income Tax (IR) table, which brings a simplified discount of R$ 528. The change aims to make the system more advantageous for workers, providing a reduction in payroll tax withholding.
The BRL 528 discount is optional and will be automatically applied to those who receive up to BRL 2,640, resulting in a total exemption from Income Tax on both the payroll and the annual declaration. It is estimated that more than 13 million Brazilians benefit from the total exemption from income tax.
For those earning more than two minimum wages, the simplified discount will provide a lower withholding tax on the payroll. However, the decision to use this discount or opt for legal deductions is made by the paying company.
Government to submit bill to tax super-rich funds
The Minister of Finance, Fernando Haddad, said this Wednesday (19) that the government will submit a bill to tax exclusive investment funds, aimed at high-income individuals (the so-called super-rich).
The proposal will be sent to Congress along with the 2024 Budget, which needs to be submitted by August 31. This is required so that expected revenue from the measure can be factored into revenue estimates. The amounts will help to reach the zero deficit target next year.
Haddad confirmed sending the measure in a quick interview to journalists after a meeting with the mayor, Arthur Lira (PP-AL), to "set the agenda for the second half".
"There is a set of measures that go along with the Budget and that do not go through the Income Tax of Individuals", said the minister. Asked about the taxation of exclusive funds, he said that the initiative is foreseen and "should go as a bill (PL)".
Plans for the Manaus Free Trade Zone with the approval of the tax reform
The tax reform was recently approved by the Chamber of Deputies and will now go to the Federal Senate for consideration. The Manaus Free Trade Zone is mentioned in some parts of the approved text.
The reform ensures the maintenance of the ZFM, determining the creation of legal mechanisms that guarantee, in general, the competitive differential of the region, at the same levels existing today.
Thus, the legislation that will govern the new taxes created should ensure that companies in the region maintain their competitiveness, “at the levels established by the legislation regarding extinct taxes”.
In addition, the text of the tax reform provides that the reduction to zero of the IPI (Taxes over industrialized products) rate, expected to occur in 2027, will not cover products manufactured in the region until December 31, 2026.
Currently, IPI benefits represent a significant portion of the stimulus given to companies in the region.
Finally, the measure also makes it possible to use the new excise tax – IS as a tool for maintaining the competitive advantage of products manufactured in the region.
The deadline for submitting the ECF in 2023 ends on July 31st
The deadline for submitting one of the most important annual obligations of the accounting and business class, the Tax Accounting Bookkeeping (ECF) 2023, is about to end. Taxpayers only have until the 31st of July to submit the document, relating to the 2022 calendar year.
The mandatory delivery of bookkeeping, instituted by the Federal Revenue Service of Brazil, is valid for all legal entities, including immune and exempt ones, whether they are taxed on actual profit, arbitrated profit or presumed profit.
The ECF declaration provides information about the tax and financial activities of the organizations. It contains data from various operations – such as, for example, imports, exports and transactions with related parties – and Digital Accounting Bookkeeping (ECD), the latter being linked to the calculation of Social Contribution on Net Income (CSLL) and Tax on Corporate Income (IRPJ), whose data must be calculated monthly.
