Tax reform text solves old problems, but can create new disputes, tax experts evaluate

First part of the proposal by the federal government’s economic team was delivered to the National Congress this week and includes the unification of PIS and Cofins in the new Social Contribution on Operations with Goods and Services (CBS) and end of the cumulative system

The first part of the tax reform proposed by the federal government’s economic team, delivered to the National Congress this week, was praised by lawyers who defend companies in disputes against the tax authorities. According to them, the unification of PIS and Cofins in the new Social Contribution on Transactions with Goods and Services (CBS) and the end of the cumulative system bring the country closer to European models of taxation on added value, simplifying the calculation. But experts also warn of the risk of inequality and new litigation in the courts.

Vice-president of the Brazilian Academy of Tax Law (ABDT), lawyer Eduardo Diamantino sees the extinction of different taxation regimes as a way for the government to create obstacles for those who take advantage of credits from current taxes.

“After almost two years announcing a project for a radical change in the Brazilian tax system, we came across a simple proposal for the unification of PIS and Cofins, accompanied by an increase in the rate. The similarity with the project presented by the then Finance Minister Joaquim Levy in 2015 is noteworthy. The proposal lends itself to hinder future compensations resulting from PIS / Cofins credits from existing processes ”, he evaluates.

For tax expert Tiago Conde Teixeira, chairman of the Tax Affairs Committee of OAB-DF, the proposal is good because it brings’ a new logic of taxation, with a simplification proposal that has been used in other countries for a long time, especially in Europe ‘. “The current taxation system is very complex and the federated entities have the competence to tax the same base in several stages”, he says.

However, Tiago Conde points out that the project disproportionately burdens the service sector, causing even more inequality. “The new system has a promise of simplification, according to the government. But the proposal is very timid and still needs to be improved ”, he comments.

In the assessment of tax attorney Richard Edward Dotoli, the government frustrates the expectations of all taxpayers and the market in general, when it presents the expected tax reform in a sliced ​​form. The expert says that the Minister of Economy presents ‘homeopathic doses’ of information that disturb the market ‘absolutely unnecessary’.

“After a huge expectation, they present a legislative change that is said to be ‘attachable’ to PEC45 and PEC 110 – projects that deal with a more comprehensive tax reform at the constitutional and infra-constitutional level. It appears that the government does not have a reform proposal, but that it is adhering to or ‘coupling’ with existing proposals. Now, if it was to join or join, I would do it already in 2019, and not now, in a troubled period for the country. In the end what is left is a significant increase in taxation, and a collection of contributions that could have been made back there. What was bad, has now changed its name and got worse ”, says Dotoli.

For the lawyer, the name ‘Reformation’ cannot be used to describe the four points indicated by the government. Dotoli believes that it would be ‘more frank and democratic’ to adhere to the proposals already under discussion in Congress, seeking a consensus. “Reform would be, for example, the withdrawal of this giant tax dispute from Pis / Cofins, created by the government itself, and allowing credits without distinction. To simplify, there is no need for ‘Reformation’ ”, he says.

In turn, tax attorney Hamilton Dias de Souza calls the proposal for the creation of the new Contribution on Goods and Services the government’s trick. “Contributions are easier to approve, because they only depend on the vote of the majority of the parliamentarians present at the voting session, while the creation of a tax is done by a complementary law, which requires an absolute majority of the members of the House and voting in two rounds ”, He explains.

Dias de Souza also criticizes the taxation of Education, which will ultimately burden the student and “constitutes a real incongruity in a country that urgently needs to make a qualitative leap in the educational area to develop socially and economically”.

President of the Pernambucano Institute of Tax Studies and post-doctorate in Tax Law, Mary Elbe Queiroz explains the difference. “This proposal deeply burdens the service provider, who does not have many credits to compensate in the model provided for in the text. Whoever opts for Presumed Profit, for example, who today pays 3.65% of gross revenue will now pay 12%. Who is in the Real Profit goes from 9.65% to 12% ”, she evaluates.

According to her, this is only the first stage. “More increases will come. Like income taxation on profits and dividends, which are now exempt, ”she says. “Once again, instead of restructuring public spending, the option was the easiest: raising taxes.”

For Wilson Sales Belchior, federal advisor to the OAB, the beginning of the Tax Reform from the institution of CBS is positive, as it demonstrates the commitment to improve the business and investment environment in the country. “Simplification, cost reduction and more legal certainty are variables that can favor long-term economic growth and development. This is observed, for example, in the proposal for uniform taxation of goods and services; exclusion of operating revenues; non-cumulative, restricting the impact on added value; reduction of accessory obligations; establishment of differentiated regimes; and reducing the potential for judicialization based on the uniformity of rules ”.

Source: O Estadão

https://politica.estadao.com.br/blogs/fausto-macedo/texto-da-reforma-tributaria-resolve-antigos-problemas-mas-pode-criar-novos-litigios-avaliam-tributaristas/