Senate approves amendment that creates tax fund for Northern States

The Senate approved this Wednesday (8.Nov.2023) by 53 votes to 24 the tax reform proposal (PEC 45 of 2019). The score was the same in the 1st and 2nd rounds. During the voting on the highlights, the senators approved an amendment that establishes the “Fund for Sustainability and Economic Diversification of Amazonas”. A fund for the State of Amazonas was already foreseen in the proposal, and the new one includes the States of Acre, Amapá, Rondônia and Roraima.

There was an agreement between the rapporteur of the proposal in the Senate, senator Eduardo Braga (MDB-AM), and the leader of the Republicans, Mecias de Jesus (RR), to approve the amendment. The score was 68 votes in favor to 1 against.

According to the proposal, the resources from this fund will be administered by the Union. A complementary law will regulate the new fund. The objective of the creation will be to encourage the development of economic activities.

With another fund created, the reform text now has 4. Here are the others:

• Regional Development Fund – R$60 billion, with resources from the Union to States, with the objective of reducing regional inequalities and encouraging the maintenance of enterprises in less developed regions;
• ICMS benefits and financial-fiscal compensation fund (Tax on Circulation of Goods and Services) – intended to offset benefits already given to companies until 2032. It will amount to R$160 billion and will be paid with Union resources from 2025 to 2032.
• Amazonas Sustainability and Economic Diversification Fund – with Union resources (to be regularized by complementary law).

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