The first comments – Part 1, Part 2, and Part 3, dealt with the occurrence of (concrete) facts that would lead to an increase in the tax burden for taxpayers, due to monetary and fiscal policies. Now we have new legal provisions and the so-called tax framework.
To spare readers from legal arguments about the issues, we reproduce the 12 measures that prove the increase in the tax burden on the Brazilian economy, listed in the article published by Jornal Terra Brasil Notícias, on May 7, 2023, which show the increase in the Union’s tax collection, which, according to the economic team, may add up to R$ 202.45 billion in additional recurring revenues, and R$ 61 billion in extraordinary revenues for 2023.
We highlight four additional issues to the 12 mentioned, which demonstrate the tax policy currently in place in Brazil: a) the Supreme Court decision that deals with the relativization of the res judicata, b) the determination of the re-inclusion in the ICMS (Tax on Circulation of Goods and Services) calculation basis of the TUST (Tariff for Use of the Transmission System) and TUDS (Tariff for Use of the Distribution System) tariffs, c) the collection of the ICMS DIFAL (Rate Difference), and d) the transfer of ICMS credits between states, in transfer operations of goods between facilities of the same company, which was fixed for 2024.
Companies should pay special attention to the government’s decision, through Provisional Measure 1,159/2023, to prohibit the crediting of PIS (Social Integration Program) and COFINS (Contribution for the Financing of Social Security) on ICMS levied on the acquisition of inputs for the production or commercialization of goods, since decisions contrary to the credit prohibition have been published.
When presenting the proposal for the new tax framework, which still depends on Congress approval, the Minister of Treasury, Fernando Haddad, said that, although the proposed rule requires revenue growth, it would not be “on the horizon” of the economic team the “creation of new taxes or increase the rate of existing taxes”. On the other hand, he defended the need to review exemptions and tax benefits to certain industries.
1 – Reversal of PIS/COFINS rates on financial revenues of large companies
- Disclosure: 01/01/2023
- Effective date: 01/02/2023
- Estimated impact: R$ 4.4 billion to R$ 5.8 billion
2 – Reimposition of taxes on fuels
- Disclosure: 02/28/2023
- Effective date: 03/01/2023
- Estimated impact: R$ 28.8 billion
3 – Tax on oil exports
- Disclosure: 02/28/2023
- Effective date: 03/01/2023 (until 30/06/2023)
- Estimated impact: R$ 6.6 billion (non-recurring)
4 – Taxation of electronic sports betting
- Disclosure: 03/01/2023
- Effective date: to be defined
- Estimated impact: R$ 15 billion
5 – “Digital tax”
- Disclosure: 04/20/2023
- Effective date: to be defined
- Estimated impact: R$ 8 billion
6 – End of IRPJ (corporate income tax) and CSLL (Social Contribution on Net Profit) exemption on tax benefits
- Disclosure: 04/04/2023
- Effective date: depends on STF (Federal Supreme Court)
- Estimated impact: R$ 90 billion
7 – End of Interest on Stockholders’ Equity
- Disclosure: 24/04/2023
- Effective date: to be defined
- Estimated impact: not disclosed
8 – Withdrawal of ICMS from the calculation basis of PIS/COFINS credits
- Disclosure: 01/12/2023
- Effective date: 05/01/2023
- Estimated impact: R$ 30 billion
9 – Taxation of income abroad
- Disclosure: 04/30/2023
- Effective date: 05/01/2023
- Estimated impact: R$ 3.25 billion in 2023
10 – Casting vote in the CARF (Administrative Council of Tax Appeals)
- Disclosure: 01/12/2023
- Effective date: 01/12/2023
- Estimated impact: R$ 50 billion (R$ 35 billion non-recurring)
11 – Zero Litigation Program
- Disclosure: 01/12/2023
- Effective date: 02/01/2023 (until 05/31/2023)
- Estimated impact: not informed
12 – Settlement of PIS/PASEP (funds
- Disclosure: 01/12/2023
- Effective date: to be defined
- Estimated impact: R$ 26 billion (non-recurring)
Source: Gazeta do Povo.
We cannot forget that we still have the tax reform that may bring more tax increases, as well as the proposal to end the exemption on profits and dividends, tax inheritances, and be more flexible about spending.” (emphasis ours)
So, be prepared. MORE TAXES TO COME
