Haddad handed over the tax reform regulation project to the president of the senate, Rodrigo Pacheco
Fabio Rodrigues-Pozzebom/Agência Brasil
Published 04/25/2024 19:45
The complementary bill that regulates the tax reform of consumption taxes provides for a mechanism that exempts bank financing for companies – in other words, it has the potential to make credit for legal entities cheaper.
This is because companies that borrow money from banks will be entitled to a CBS (federal VAT) and IBS (state and municipal VAT) credit, which can be used in the chain of these companies, reducing the payment of these taxes. This, however, does not apply to individuals, since they do not generate or write off credits.
“On the bank’s side, it is paying VAT on top of its financial margin (the so-called banking spread, the difference between the cost of raising money and the interest charged to customers) and, on the borrower’s side, it will be entitled to credits from the tax”, says Daniel Loria, Program Director at the Extraordinary Secretariat for Tax Reform. “It’s something that has quite transformative potential,” he said.
This is because companies that borrow money from banks will be entitled to a CBS (federal VAT) and IBS (state and municipal VAT) credit, which can be used in the chain of these companies, reducing the payment of these taxes. This, however, does not apply to individuals, since they do not generate or write off credits.
“On the bank’s side, it is paying VAT on top of its financial margin (the so-called banking spread, the difference between the cost of raising money and the interest charged to customers) and, on the borrower’s side, it will be entitled to credits from the tax”, says Daniel Loria, Program Director at the Extraordinary Secretariat for Tax Reform. “It’s something that has quite transformative potential,” he said.
Real estate sales: change for companies
The sale of properties by companies, whether developers or construction companies, will have their taxation changed. The change does not apply to sales made by individuals.
The regulations drawn up by the economic team stipulate that the company may apply a reduction in the tax calculation base resulting from the amount paid for the land. If the property is for housing, there will be a second reduction, worth R$100,000, which will tend to benefit housing for the low-income population more, according to the Special Secretary for Tax Reform, Bernard Appy.
“When is the function of this reducer? It is to make the system progressive. A popular Minha Casa Minha Vida property will pay less tax than it pays today, a high-income property will pay more, but not much more”, says Appy.
This is because, according to him, the impact of a R$100,000 reduction in taxation on popular properties is more relevant than on high-end projects due to the value of the units themselves.
After applying the two reducers to the calculation base, the CBS/IBS rate will then be applied, which has a 20% reduction in relation to the standard or reference rate. The construction company or developer may use the credits on products purchased to carry out the work, such as construction materials, to collect the tax.
Appy states that the calculations made by the economic team indicate that, in the case of properties worth R$200,000, it is possible to predict that there will be a reduction in the tax burden in relation to the incident today. In some cases, he says, the construction company will be able to eliminate taxation in the new model and start accumulating credits, which can be used in other operations.
