The Minister of Economy, Paulo Guedes, said today that Brazil needs to carry out the tax reform to enter the OECD (Organization for Economic Cooperation and Development) and have a better position in the international scenario of production chains.
The statement was made by the head of the ministry during his participation in the Diagnostic Seminar on Administrative Tax Litigation, held by the IDB (Inter-American Development Bank) and the Special Secretariat of the Federal Revenue.
“If Brazil is close and reliable to have a relocation and a reconfiguration of global production chains, we need to carry out our tax reform. We want access to the OECD, we are already on the list, and we present here our tax reform in progress. in this direction: lowering taxes on companies”, said Guedes, highlighting the government’s proposals already sent to Congress.
These two proposals are the Income Tax reform, which would reduce taxes levied on companies, and the CBS (Contribution on Goods and Services), which unifies federal taxes on consumption. Both texts, however, are stalled in the Legislature.
Diagnosed with covid-19, Guedes participated in the event in a virtual way and also said that the proposal to reform the IR of government companies was moving towards a load of 23.5%, which is the average of taxes levied in the OECD. The entry of Brazil into the bloc, considered the group of most advanced countries in the world, is one of the main agendas of the Bolsonaro government in the economy.
The minister also signaled that there would be taxation of profits and dividends. “These are progressive, correct taxes, which Brazil did not have the courage to charge for three and a half decades by strong corporate business lobbies, who work against a reform that already had more than four hundred votes in the Chamber of Deputies, but was paralyzed in the Senate”, added.
During his speech, Guedes also stated that the Brazilian government will make another round of reduction in the IPI (Tax on Industrialized Products), expanding the cut from 25% to 35%, after previous promises and setbacks on the adoption of the measure.
“We have just reduced by 25% and we are going for another round, lowering to 35% the drop in the IPI”, he said.
The discussion about cutting the IPI involves a dispute with parliamentarians who defend the Manaus Free Trade Zone. As companies located in the region are exempt from IPI and generate credits on this tax, a cut in rates makes the activity in the Free Zone less attractive.
Therefore, when elaborating the expansion of the cut, the government even created the outline of an exception list with more relevant products for the Free Zone. Even so, the measure stalled in the Executive’s internal discussions.
* With information from Reuters