Recently, the Chamber of Deputies approved the basic wording of the first supplementary bill (PLP 68/2024) that regulates the tax reform on consumption. The bill is now under analysis by the Federal Senate.
Upon approval of the constitutional amendment of the tax reform (EC No. 132/2023), ICMS (Tax on the Circulation of Goods and Services) and ISS (Municipal Services Tax), taxes within state and municipal scope, respectively, will be replaced by the Tax on Goods and Services – IBS, and PIS/COFINS (Social Integration Program/Contribution for the Financing of Social Security) and IPI (Tax on Manufactured Products) contributions, taxes of federal jurisdiction, will be replaced by CBS – Contribution on Goods and Services.
Article 9 of EC No. 132/2023, in its paragraph 1, established the economic sectors that will be benefitted, as concerns operations with goods and services, with a 60% reduction in the rates of IBS and CBS, through a supplementary law.
Paragraph 10 of that same provision provides for a five-year cost-benefit assessment of the special regimes of reduced rates, whereby, depending on such qualitative assessment, the law may establish a transitional regime for the standard (“full”) rate.
Pursuant to the constitutional rule, Paragraph 11 of Article 465, a provision that deals with said five-year assessment in the wording approved by the Chamber of Deputies, provides as follows:
The first five-year assessment shall be carried out based on the data available in the civil year 2030, and may result in the submission of a supplementary law bill by the Executive Branch, effective as of 2032, to be sent by the last business day of March 2031, subject to the following: […]
So far so good. The problem lies in setting the ceiling of 26.5% for the sum of IBS and CBS rates, carried out under Item II, of Paragraph 11, Article 465, under the following terms:
II – if the sum of the estimated reference rates referred to in Item I of this paragraph results in a percentage greater than 26.5% (twenty-six point five percent), the Federal Executive Branch will forward a supplementary bill to the National Congress, after hearing IBS’s Steering Committee, proposing the decrease of the rate reductions referred to in Articles 122 and 123 of this Supplementary Law;
III – the decrease of the tax rate reductions referred to in Item II of this paragraph may be consistent or differentiated by products or sectors;
IV – the supplementary bill referred to in item II of this paragraph should be supported by the data and calculations that based its submission.
Although the establishment of this cap is in itself positive, it is important to point out that it may be out of step with the constitutional wording approved last year.
The tax rate reductions referred to in Articles 122 and 123 of the basic wording of the Chamber of Deputies are those provided for in Article 9 of EC No. 132/2023.
In Paragraph 10 of this constitutional provision, an economic sector can only be migrated from the special regime of reduced rates to the standard rate regime after a cost-benefit assessment and by establishing a transitional regime.
There is no mention in this constitutional provision of decreasing the rate reductions of a special regime to meet a certain sum ceiling of IBS and CBS rates, so that a sector cannot be excluded from the rate reduction regime solely to meet the 26.5% ceiling, which is only an estimate, as highlighted in the basic wording itself.
If this ceiling, as it stands, might pass in the Federal Senate, which is not expected, it is certain that the impacted sectors may resort to the Judiciary Branch in the future, arguing that such cap contravenes the provisions of EC No. 132/2023.
The unconstitutionality of the cap lies in the cases in which the exclusion of the special regime of reduced rates occurs without meeting the requirements of Paragraph 10 of Article 9 of EC No. 132/2023, namely, the qualifying cost-benefit assessment and the institution of a transitional regime for the “full” tax rate.
Available in: : https://www1.folha.uol.com.br/
Autor: Flávia Sant'Anna Benites • email: flavia@ernestoborges.com.br • Tel.: +55 67 99984 1406
