Among the measures planned by the government in the reform of the Income Tax, is the one that provides for the end of the modality called Interest on Own Capital (JCP), precisely the form most used by federal state companies to remunerate the National Treasury for its profits. From 2017 to 2020, an average of 73% per year of the results paid by state-owned companies to the federal government was precisely through this instrument. On average, R$ 10.5 billion a year enters the Union’s coffers in remuneration paid by state-owned companies – almost R$ 3 billion in the form of dividends and R$ 7.6 billion in interest on equity.
Specialist in taxation, economist José Roberto Afonso claims to be sure that the Union will lose resources because no one receives more JCP in the country than the Treasury itself, considering the companies in which it controls. According to him, it is likely, then, that the Treasury will want to bring these resources forward in 2021. “Many taxpayers, if the reform passes as it is, will anticipate distribution, including federal state companies. This is a strong hypothesis”, says Afonso.
In practice, the project does not end with JCP, but discourages its use by large companies. Companies will no longer be able to deduct what they pay their shareholders, through the JPC, from the IR to be disbursed. The distribution of dividends, another way of remunerating the shareholder, will be taxed at a rate of 20%. Today, this operation is tax free.
‘Shot in the foot’
The difference, explains the economist, is that the resources of the JCP go “free” to the Treasury. On the other hand, almost half (48%) of the IR collection is shared with States and municipalities, through the State Participation Funds (FPE) and Municipalities (FPM), in addition to resources linked to education and health.
“Change can be a shot in the foot. Whoever wrote the project forgot to ask the Treasury”, says Afonso, commenting on the project, which has received much criticism from the financial sector and large companies, which declare the tax based on real profit.
The survey of the payment of dividends was made by the consultant of the Senate, Leonardo Ribeiro, in partnership with José Roberto. In 2019, of the total of R$ 21.5 billion paid by federal state companies to the Union, R$ 14.3 billion were from interest on equity.
Ribeiro emphasizes that reforms of this magnitude, such as the Income Tax, must be evaluated as a whole and its collateral effects. He suspects that the government has not taken this issue into account when closing the project. Afonso warns that a project of this type cannot be voted on in a hurry, as the president of the Chamber, Arthur Lira (Progressistas-AL) wants.
Afonso draws attention to the fact that dividends serve as a signal for the payment of profit sharing to state-owned directors and even employees. As there may be, in the future, more payment of dividends, the trend is for an increase in the share of profits to directors and employees.
A study carried out by Afonso five years ago showed that the companies that paid the most JCP, in addition to state-owned companies, were banks, insurance companies, extractivists, such as Vale, energy and telephone companies.
When the Treasury is contacted, he says that there is no problem because, from the Union’s point of view, receiving shareholder remuneration such as interest on equity or dividends is indifferent. “This is due to the fact that both JCP income and dividend income are linked to the reduction of the public debt”, replied the Treasury.
In addition, according to the agency, the Federal Government has tax immunity and, therefore, is not subject to IR taxation on JCPs received. The Treasury says it has not asked the state-owned companies to anticipate results. “It is a prerogative of the boards of directors of companies”, he says.
The BNDES, on the other hand, informed that it does not consider the anticipation of results to the Treasury this year. Banco do Brasil stated that its remuneration policy was approved in January and foresees the distribution of 40% of the profit. Caixa and Petrobras did not respond.
See what are the controversial points of the tax reform:
Profits and dividends:
Taxation of profits and dividends at 20% with an exemption of R$20,000 per month for micro and small business shareholders. For tax havens, the rate is 30%. Today, these earnings are exempt.
what is at stake?
Proposals to reduce the rate to 15%, 10% of the exemption range, to make a transition, charge the progressive table and allow exemption for remittances of profits abroad.
End of the deductibility of Interest on Equity (JCP), another form of remuneration to shareholders used by companies, with a reduction in the income tax payable.
what is at stake?
Proposals to stay the way it is or create a transition
Drop of IRPJ:
The project predicts a drop of five points in two years
what is at stake?
Guedes waved for bigger cuts, as long as there are cuts in subsidies for the petrochemical and beverage industry
Real estate funds:
End of Exemption from Real Estate Investment Funds
what is at stake?
Sector was to present proposals to Guedes and the rapporteur to change the proposal next week
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