Tax reform report creates unified rates and provides for ‘sin tax’ – Prime Time Zone


Text by senator Roberto Rocha projects union of federal, state and municipal taxes; Selective Tax will be levied on specific goods and services that cause damage to the environment and health

joelfotos/PixabayChanges in the tax system must go through the Senate Constitution and Justice Committee before going to plenary debates

The report of tax reform provided for by the Proposal for Amendment to the Constitution (PEC) 110 will be presented this Tuesday, 5, at the Committee on Constitution and Justice (CCJ) of the Senate. Senator Roberto Rocha’s text (PSDB-MA) provides for the simplification of tax collection and the union of different sources, in addition to the creation of the “sin tax”. Participating in the act are the president of the Senate, Rodrigo Pacheco (DEM-MG), the Minister of Economy, Paulo Guedes, as well as members of the economic team and representatives of state and municipal associations. The expectation is that the measure will pass through the CCJ this month and then be forwarded for debate and voting in the Plenary. An early presentation to the Young pan reveals that the rapporteur will indicate the creation of the dual model of Value Added Tax (VAT), one for federal taxes, and the second for states and municipalities. The federal VAT will be composed of the Social Contribution on Goods and Services (CBS), which will replace the PIS and Cofins taxes. The text that creates the CBS is in progress at Chamber of Deputies and there is no forecast to be put to a vote. The VAT of subnational entities will integrate the Tax on Goods and Services (IBS), resulting from the combination of ICMS (States) and ISS (municipalities). The creation of the IBS must be done in the form of a complementary law.

The text also provides for the Selective Tax (IS) as a substitute for the Tax on Industrialized Products (IPI). The new tax, also known as the “sin tax”, must be levied on specific goods and services that generate damage to the environment and health, such as operations with oil, cigarettes and beverages. Rocha’s report will also indicate the financing of the Regional Development Fund (FDR) with resources from the IBS and the maintenance of differentiated treatment for companies included in the Simples Nacional. PEC 110 is one of the four stages of the tax reform that are being processed in Congress. The Senate is also changing the Income tax, already approved by the Chamber. Senator Angelo Coronel (PSD-BA) is responsible for reporting the measure, who has already stated that he has no forecast to present the text, and that the vote on the measure may only be for 2022. The Chamber of Deputies, on the other hand, hosts the discussion for its creation of CBS and changes in the refinancing of tax debts (Refis). Tax reform is one of the main pillars of the economy transformation agenda projected by Guedes. The first stage, which provided for the creation of CBS, was delivered to the Chamber in July 2020.