Tax Reform and Advocacy – PEC 45/2019 (Part II)

For law firms opting for the presumed profit modality, this Proposal also implies an increase in the tax burden.

Law firms under the tax regime based on taxable income are currently subject to the requirement of Income Tax (IRPJ) with a rate of 15% and an additional 10%, Social Contribution on Net Income (CSLL) equivalent to 9 , 0%, PIS and Confis, whose rates are 1.65% and 7.6%, respectively, and ISS with a rate between 2% and 5%.

In the system of PEC No. 45/2019, these companies would remain subject to the rates of IRPJ and CSLL, in addition to the incidence of the Tax on Transactions with Goods and Services (IBS) with a single rate estimated at 25%, representing an increase in the tax burden to be borne by advocacy.

For law firms opting for the presumed profit modality, this Proposal also implies an increase in the tax burden, considering that today the lower rates referring to PIS and Cofins, which together correspond to 3.65%, would be replaced by IBS with a higher rate.

In addition, there are other risks associated with this regulatory change, such as the burdens on the payroll of office employees, massive migration from Simples Nacional to the tax regime under the IBS in response to the eventual requirement of contracting companies regarding credits this new tax, in addition to the risk of judicialization.

It is essential, therefore, to carefully monitor the debates and emphatically reject any normative change that implies excessive taxation of the legal services provided by lawyers and lawyers, thus impairing the performance of this essential function in the justice system.

By: Wilson Sales Belchior