Haddad delivers a tax regulation project to Congress; rate can be up to 27.3% – 04/24/2024 – Market

Minister Fernando Haddad (Finance) delivered to the National Congress this Wednesday (24) the first proposal to regulate the tax reform.

The complementary bill deals with the general rules for the operation of new taxes, the federal CBS (Contribution on Goods and Services), the IBS (Tax on Goods and Services) of states and municipalities and the IS (Selective Tax).

In a press conference after the event, the extraordinary secretary for Tax Reform, Bernard Appy, said that, with the design of the bill, the rate of the new VAT (Value Added Tax) would be between 25.7% and 27.3% , with an average of 26.5%. “I would say the benchmark is the average,” he said.

If this level is confirmed, the Brazilian rate will be among the highest in the world for a VAT. Today, the highest of its kind is in Hungary, at 27%.

It was not in the Ministry of Finance’s plans to disclose the tax rates now, but the economic team was alerted that this would be one of the first demands from deputies at the beginning of the project’s processing.

When the reform was enacted at the end of last year, the government preferred not to reveal the new calculations, despite the insistence of several business sectors.

Last year, the government estimated a rate of up to 27.5%, but the updated average value was a little lower than previously predicted because some items in the regulatory project became tougher.

In practice, this means tighter rules for differentiated regimes or those with reduced rates. It is the first time that the government has published the average rate variation band, which is the point considered most feasible.

According to Appy, the final result will depend on the changes promoted by parliamentarians during the process. The more exceptions, the greater the burden on other taxpayers.

On the other hand, the Treasury expects that the digitalization of collections will play an important role in reducing tax evasion, which would contribute towards reducing the tax rate.

Haddad delivered the project to the president of the Chamber of Deputies, Arthur Lira (PP-AL), in the presence of House leaders. According to him, the text has around 300 pages and 500 articles.

“People may be a little scared, there are 300 pages and 500 articles, but this replaces a multitude of laws that are being repealed and replaced by a tax system that will be one of the most modern in the world”, stated the minister.

After days of noise surrounding the government’s political articulation with Congress, the Finance Minister took advantage of the act to praise the negotiations with the Chamber and Senate to send the proposal.

“We are very confident in the process. I once again made a point of praising the negotiations that have been taking place in the Chamber and the Senate around the projects, especially the economic agenda, which have received attention from the Houses. We do not always leave here euphoric with the result of the negotiations, but in all cases there was progress. In all cases we took a step in the right direction”, said Haddad.

“All the projects sent to Congress received attention, and President Lira assured me that the calendar he intends to set for deliberation in this House runs until the mid-year recess”, stated the minister.

After the event in the Chamber, Haddad went to the official Senate residence to symbolically hand over the project to the President of the House, Rodrigo Pacheco (PSD-MG). Senators will analyze the proposal only after the vote in the Chamber.

The minister’s initial idea was to send two projects. The second would group together the regulation of the IBS Management Committee and the new rules on how to deal with administrative and judicial disputes regarding the new taxes, which, in practice, will define how litigation will work.

On Monday night (22), Haddad stated that the sending of texts would be divided. As he showed the Sheetan impasse involving the IBS Management Committee prevented the completion of the second project.

Representative Aguinaldo Ribeiro (PP-PB), rapporteur of the PEC (proposed amendment to the Constitution) of the reform last year, was also present and stood close to Haddad during the press conference, although his appointment as rapporteur of the project is uncertain.

As shown by Sheetamid anticipated disputes over succession on the Board of Directors of the Chamber, the possibility of Ribeiro not being appointed to the post is circulating behind the scenes.

Lira signaled to allies that she is studying the possibility of slicing up the texts that will be sent by the Luiz Inácio Lula da Silva (PT) government to honor different political groups or parties with the reports.

Ribeiro has the support of Finance and Lula, who defended his nomination this Tuesday (23) in a conversation with journalists at the Palácio do Planalto.

The PT member highlighted that appointing the rapporteur is Lira’s prerogative, but stated that the deputy is familiar with the topic and the negotiations, which could facilitate the processing of the text.

“The person who nominates is the president of the Chamber, far from it for me to nominate, I would just like them to take that into account,” said Lula, without mentioning Ribeiro by name.

The president of the Chamber said this Wednesday that he will talk to party leaders to define reports and a timetable for processing.

“I didn’t have a meeting with parliamentarians and leaders to discuss, but our idea is to work so that in 60, 70 days this can be in the Chamber plenary, that is, before the end of the first semester recess. If there are no political conditions, the We’ll see over time”, said Lira.

He said that Ribeiro will have “eternal gratitude” for the role he played in reporting the PEC’s reform last year, but did not give certainty about his appointment to take care of the regulatory projects.

“The president’s opinion is important, we respect it, but we have an absurd number of competent deputies who also wish to report on these matters. Deputy Aguinaldo Ribeiro always has and will have our eternal gratitude, he is a party companion, highly regarded and competent , but he has already reported the tax PEC, these regulations do not necessarily need to have the same rapporteur”, he said.

According to him, there is the possibility of forming two working groups to take care of the discussions.

Pacheco, in turn, stated that he also intends to speed up the analysis of the text.

“Even though it is an election year, we will be fully committed to, this year, just as we did with the constitutional amendment last year, deliver this approved law to Brazilian society so that we can finally have a tax reform in our country,” he said. after receiving the text.

The tax reform regulations will detail several points of the tax reform, such as which products will be part of the so-called National Basic Basket, which will have a zero rate, and which will have the benefit of the reduced rate (equivalent to 40% of the reference charge).

“Several foods were included in the zero-tax basic basket. There is a second rate that is not zero, which is the reduced rate. And a few luxury consumer products that remained at the full rate, at the so-called standard rate or reference rate This is all in the tables, this will all be public knowledge”, said Haddad.

The Ministry of Finance will hold a press conference this Thursday (25) to detail technical points of the proposal.

Thaísa Oliveira collaborated