This is an automatic translation of the Conexis press release
Brasilia, 04/07/24 – The text of the Tax Reform regulatory project presented this Thursday (4) represents a risk to one of the most important premises of a structuring reform, which is the maintenance of the tax burden, by not including the reduction of the tax burden on essential telecommunications services for the most needy Brazilians.
“We recognize the challenges and thank the representatives of the working group for their openness to dialogue, but the sector understands that with the regulations presented, the country is losing the opportunity to advance in digital inclusion,” said Marcos Ferrari, CEO of Conexis Brasil Digital.
Maintaining the inclusion of interest, fines and charges in the calculation base of the GST and CBS will increase the tax burden in several sectors, including telecommunications.
The sector’s tax burden is currently 29.3%, the third highest among the 15 countries with the most mobile phone lines. The text presented today will increase taxes on the sector, harming millions of Brazilians, especially those with low incomes. In addition to penalizing the sector, the measure is unconstitutional and must be corrected in the text that will be voted on by legislators.
The report also allows for the cascading taxation of telecommunications services, as it prohibits credit for all transactions related to goods for personal use and consumption, instead of prohibiting credit only for transactions on goods and services considered non-essential (weapons, ammunition, alcoholic beverages, jewelry, among others).
Another point not included in the report, which will mainly harm low-income families, is the non-inclusion of telecommunications in the reimbursement rate of 50% for CBS and 20% for IBS. In this regard, it is important to note that these families spend around 12% of their household budget on telecommunications services.
Despite being recognized as an essential service of utmost importance for economic and social development, the sector suffers an extra burden that increases the tax burden on telecommunications by 3.8 percentage points, due to the sectoral funds and the CIDE (FUST, FISTEL, FUNTTEL, CRFP and CONDECINE). The request for these funds, which are used for the government’s primary surplus, to be absorbed by the SBC was also not included in the report.
On the positive side, the report adjusts art. 11, inc. IX, to make the definition of “transmission by physical means” clearer, for the purposes of the “location of operation” of communication services, guaranteeing greater legal security for the taxpayer when collecting the tax.
Conexis continues to support the broad debate on this important issue for the modernization of the country’s business environment and hopes that its observations will be perceived as relevant, thus ensuring the preservation of the basic premises of tax reform.
