Despite establishing charging at the destination (place of consumption of the goods), the tax reform will bring exceptions for tolls and travel between states. The complementary bill that regulates the topic defined the treatment of travel between states, cargo transportation and tolls.
In relation to passenger transport, the text, sent to Congress on Wednesday (24), defined that the triggering event for the Tax on Goods and Services (IBS, a tax administered by states and municipalities) will be the starting place of the race . This way, the state and municipality where the bus, plane or taxi departs (in the case of flights between cities) will take care of the revenue.
In the case of cargo transport, however, the opposite will apply. The triggering event was defined as the act of delivery or offering of the transported goods to the recipient. This way, IBS will be charged at the destination. The same will apply to the purchase of goods on the website, with tax being charged upon delivery when the product is sent by courier or by post.
For tolls, the rule is more complicated. The IBS will be shared among the municipalities and units of the Federation through which the stretch of highway granted to the private sector passes. In the case of municipalities, the resources will be divided in proportion to the length of the road in each location.
In the states and the Federal District, there will be a specific rule, but the government proposes that the distribution also occurs proportionally to the length of the road operated by the concessionaire in each unit of the Federation.
When purchasing properties and holding events, IBS will be charged at the location of the event, even if the company is headquartered in another state. In communication services with transmission via physical means, such as cables and optical fiber, the triggering event will also occur at the destination. If transmission does not occur through physical means, such as electromagnetic waves, the tax will be charged at the recipient’s main residence.
IBS regulation is important to define which city or state will receive the collection. The complementary bill established how the charge will be in the final scenario, which provides for taxation at the destination (place of consumption of the goods). The amendment to the Constitution promulgated at the end of last year establishes a transition schedule for charging at destination, which begins in 2029 and runs until 2078, with full taxation at destination only coming into force from 2079.
Tax credits
The bill also defined how tax credits will be returned to companies. Through such credits, the company will receive back the tax paid in the previous stages of the production chain, preventing cascade charging (repeated taxation of inputs), one of the main problems of the current tax system. In this way, the company only pays tax on the value added to the merchandise in the stage of the production chain that corresponds to it, hence the name Value Added Tax (VAT), the main pillar of tax reform.
The complementary bill established a standard deadline of 60 days for the return of credit to companies. However, the period may take up to 270 days (nine months), if the credit request needs to be analyzed by the future IBS Management Committee, the body that will coordinate the division of tax resources.
According to the government’s proposal, the 60-day period will be applied in three situations. The first will be when the company is in compliance programs authorized by the Management Committee. The second, in the purchase of machinery, equipment, properties and other assets considered as fixed assets.
The third will be when the amount returned is within the average of credits in the last 24 months, up to the limit of 150% between the credit generated and what the taxpayer will have to pay in tax. If the deviation exceeds this percentage, the Management Committee will carry out a thorough analysis, which could take up to nine months.
Credits will be corrected by the Selic Rate (basic economic interest), but only from the 76th day after the request. With the standard period of 60 days, only companies that have a problem will receive the tax credit with some correction. The project also clarified that the purchase of health plans by a company for employees will not generate credit. The government claims that this transaction is not a purchase of inputs, with the beneficiaries being individuals.
At a press conference to explain the complementary bill, the extraordinary secretary for Tax Reform, Bernard Appy, explained that the 270-day deadline aims to prevent fraud. He cited an example in which companies buy to build stocks and want to obtain, within 60 days, the tax credit for goods that will take up to a year to be sold.
Secretary Bernard Appy – Marcelo Camargo/Archive/Agência Brasil
Reviews
The standard 60-day deadline is above the 30-day range advocated by industry bodies and publicly traded companies. According to Appy, however, the effective period may be below 60 days due to the automation of the tax system, both in the collection and reimbursement of credits.
“Even if the company is out of standard, but is a good taxpayer, it can refund in 30 days, it could be a week. Because the deadline of 270 is only because there are, yes, cases of fraud, or with stock, which it will later sell. It doesn’t make sense for me to return everything at once, and then have the credit operation”, declared the secretary.
