FecomercioSP – Tax Simplification
Overcoming the current critical situation of the economy, in order to put Brazil on the path of growth compatible with its potentialities and needs, is proving more difficult than the optimism aroused by the reformist impetus of the new government assumed.
After the revelation that Gross Domestic Product (GDP) grew by only 1.1% in 2018, the same result as in 2017, the initial projections for 2019 are also being revised downwards, as was the case last year. In the Focus report of the Central Bank, this year’s GDP estimate has already dropped from 2.55% to 2.30%, while the Organization for Economic Co-operation and Development (OCDE) reduced its forecast from 2.1% to 1.9%.
The federal government itself seems to be realizing that approval of the Social Security Reform, however fundamental it may be for the settlement of public accounts, it will not be enough to unlock investment and job creation. Further progress will be required in other areas, such as privatizations and the revision of the federative pact.
In this broader focus on the main obstacles to our sustained development, the chaotic Brazilian tax system, which suffocates free enterprise and alienates foreign companies, is highlighted.
According to the World Bank’s Doing Business 2018 project survey, the Brazilian entrepreneur spends an average of 2,000 hours per year in the calculation and payment of taxes, while in the OECD countries, they average only 160 hours a year. This absurd discrepancy positions Brazil in 184th place in a ranking of 190 researched economies and exposes the perverse and precarious reality of those who venture to undertake here.
The good news (they exist!) is that this situation can be reversed in the short term by simplifying ancillary obligations and issuing tax documents, with greater transparency and balance in the relationship between companies and the Treasury. More importantly, changes in the national tax system for this purpose can be made through complementary law and ordinary law, thereby circumventing the inherent difficulties in the processing of constitutional amendments.
Two experts in the field, the lawyer Ives Gandra Martins and the former Secretary of the Federal Revenue Everardo Maciel, who, at the request of FecomercioSP, prepared a series of preliminary projects to improve, from the tax point of view, the business in Brazil.
Unification of registry data between Union, States and Municipalities, previous information on the criteria for auditing, establishment of deadline for the Treasury to respond to queries and predictability of ancillary obligations (which would have to be disclosed in the previous year) are some of the proposals presented with the purpose of facilitating the life of the taxpayer.
Another initiative is to prohibit the use of a negative certificate of tax debts as a political penalty, which occurs when a company is prevented from participating in bidding processes, which further hampers its chances of paying off debts. It also provides for the equivalence of criteria, as the debtor taxpayer is penalized with fines and interest, which does not occur with the refunds and reimbursements owed by the State.
In short, they are efficient and technically sound measures to simplify taxation, which can be approved and implemented quickly, without the risks of the endless controversies surrounding the proposals marked by ideological and partisan terms.
