On 07/21/2020, the Federal Government presented to the National Congress the proposal for the 1st phase of the tax reform elaborated by the Ministry of Economy. The proposal, filed asLegislative Bill no. 3887/2020, foresees the extinction of the Contribution to PIS / Pasep and the Contribution to the Financing of Social Security (Cofins), and institutes, in place, the Social Contribution on Operations with Goods and Services (CBS).
The CBS will levy on the gross revenue arising from operations with goods and services, as well as on amounts paid on imports of goods and services. Under the terms of the proposal, the incidence of CBS is restricted to operating revenue, removing the broad taxation on all business activity.
Other than the exceptions indicated in the proposal, the contribution will follow the non-cumulative system, making it possible for the taxpayer to appropriate credits and use them, at their face value, to deduct the amount of the contribution levied on the operations held in the same or subsequent periods. This format approximates CBS to the Value Added Tax (VAT) since the taxation only applies to the value added to the product or service.
Unlike other taxes that follow the non-cumulative system, the balance of accumulated credits of CBS existing at the end of each quarter may be subject to a request for reimbursement or offset with other taxes administered by the Brazilian Federal Revenue.
Another novelty of CBS is the possibility of appropriating credit in the acquisition of goods and services from legal entities opting for the Nacional Simplified Taxation regime, which shall highlight the value of CBS in the tax documents they issue, only to credit by the acquirer. Excluding some cases detailed in the project, taxpayers cannot appropriate credits related to acquisitions or sales not charged by CBS will be prohibited.
An interesting point of the proposal is the attribution of tax liability to digital platforms if the user selling legal entity does not issue an electronic tax document for registering the transaction. A controversial point is the attribution of joint liability to digital platforms domiciled abroad for the collection of the CBS levied on the import of goods, including accruals and applicable penalties, after simplified online registration with the Federal Revenue of Brazil.
The general rate of CBS on gross revenue and imports is 12% (twelve percent). Financial and similar institutions are subject to a differentiated rate of 5.8% (five integers and eighty-hundredths percent), with no possibility of appropriate credits. There are also specific rates for single-phase taxation.
The CBS assessment basis does not include “internal” charges, as the amounts of ICMS, ISS, and unconditional discounts highlighted in the invoices, as well as the CBS itself.
The Legislative Bill brings transition rules for the implementation of CBS and a 6 (six) months vacatio legis, which is indispensable for the proper adjustments of systems and procedures.
The other phases of the Tax Reform prepared by the Ministry of Economy involve (i) changes in the IRPJ and IRPF legislation, with a reduction in corporate taxation and establishment of dividend taxation, (ii) changes in the IPI legislation, for simplification and alignment with the Excise Tax (selective), and finally, (iii) reduction of the tax burden on the payroll.
The tax teams of Fraga, Bekierman & Cristiano Advogados are following the processing of PL 3887/2020, as well as other projects related to tax reform (PEC 45/2019 and PEC 110/2019) and available to answer any questions.