Check out brief comments on the various proposals relating to tax issues that will be debated in this second semester.
The second semester started off on a fast pace. With the establishment of the policy of increasing the minimum wage (Law nº 14,663/2023) and the need to support the new fiscal framework proposed by the Federal government, news headlines were focused on tax issues. And now, what to do? Shall we summarize everything?
The sending of the proposed constitutional amendment on Tax Reform to the Senate shook the market, confident in the idea of simplification, transparency and stimulus to the economy. The proposal provides for the unification of federal taxes (PIS/COFINS and IPI) in the new Contribution on Goods and Consumption (CBS) and state (ICMS) and municipal taxes (ISS) in the new Consumption Tax (IBS), following the “ value added tax” (VAT), where the concentration of revenue will pass to the destination (place where the good was purchased or the service provided). The proposal foresees the creation of a new federal selective tax and the institution of the “cashback” system.
Do we have the best wording? Not yet. The objective is modernization, economic boost and promotion of national business competitiveness. But there are many deadlines and doubts about its implementation and how to deal with the legacy of the previous system (accumulated credits and tax benefits). The text is expected to be improved by the Senate, to return to the Chamber of Deputies before being promulgated by the President of the Republic.
Since the Tax Reform was divided and it was decided that at first only matters relating to taxes on consumption would be voted and only then would there be discussion on taxation on income, the government surprised us all by deciding to bring forward some topics relating to Income Tax (IR) to mitigate the impacts of reducing exemption bands. How? Via provisional measure and a bill.
Changes were also proposed in the taxation of closed-end funds from 2024 onwards: (i) requirement of income tax on their income, through the institution of the come-quotas system (rates of 15% or 20%); (ii) additional taxation upon redemption of shares (regressive rates of 22.50% to 20% or 22.50% to 15%) and (iii) taxation of the stock of income accumulated in their shares (rate of 15% or 20% ). FIPs, FIAs and ETFs (except Fixed Income ETF) characterized as investment entities are excluded from the changes, maintaining their taxation on amortization, redemption or distribution (Provisional Measure No. 1,184/2023).
The government also proposed to tax investments abroad with an IRRF (income tax) requirement on income earned by individuals residing in the country on financial investments, controlled entities and trusts abroad, replicating the text brought and debated in Provisional Measures Nos. 1,171/2023 and 1,172/ 2023, not approved in the first semester (Bill No. 4,173/2023).
Subsidies, whether for investment or for funding, must be taxed again by the IRPJ/CSLL in 2024. Article 30 of Law No. 12.973/2014 of Justice (STJ) was expressly revoked in Provisional Measure No. 1,185/2023 and what was decided by the Superior Court of Justice (STJ) was overcome. The granting of tax credits is created, which can be offset against other taxes only by previously qualified taxpayers who receive subsidies for the implementation and expansion of an economic enterprise.
And what about interest on equity (JCP)? They will no longer exist! From 2024 onwards, the proposal is that the deduction of JCP from the IRPJ/CSLL calculation base will be prohibited, preserving only the right of deduction in 2023, even if paid or credited in 2024 (Bill No. 4,258 /2023).
And that’s not all. There is a proposal that, in 2023, the casting vote be resumed in the Administrative Council of Tax Appeals (CARF), reserving the casting vote to the judge representing the National Treasury in the event of ties in the judgements (Bill No. 2,384/2023).
A lot of surprises, right? There are less than four months left in 2023. The National Congress needs to analyze and decide on all these proposals. The recommendation at this time is to remain calm and attentive. It is necessary to evaluate the effects of these changes on a case-by-case basis and begin to organize oneself. Some topics require preparation for implementation or discussion. To overcome this major shift in tax issues at the beginning of this semester, taxpayers need to be prepared.