Tax association study shows weight in the case of industry, which will only be eliminated by tax reform after 2033
Study of Febrafite, national association of state income inspectors, shows the weight of cumulative taxes in the current Brazilian tax system compared to what exists in Europe. read here the full study (PDF – 1MB).
The accumulation of taxes at different stages of the production chains is one of the main dysfunctions of the Brazilian tax system.
Reducing this problem is one of the objectives that led to the approval of tax reform at the end of 2023 with the creation of VAT (Value Added Tax), which replaces several taxes.
The approved reform establishes transition until 2033. During this period, companies will be required to pay cumulative taxes.
PRESUMED PROFIT
The study presents a comparison of tax payments in Brazil and Europe in different cases. The biggest difference appeared in the case of a producer of industrialized goods who pays taxes according to the presumed profit system. In this situation there are lower rates than in real profit. But it is not possible to deduct taxes already paid, unlike companies taxed based on real profits.
In Europe there is also a cumulative nature of taxes with VAT. But it is much lower than the current Brazilian system because of the possibility of deducting tax already paid at other stages of the production chain.
A European manufacturer has to pay 0.13% in taxes accumulated on the value of the product in the case studied by Febrafite. In Brazil, the manufacturer pays 3.69% in accumulated taxes. It is 2,838% of what is paid in Europe, the equivalent of 28 times.
Industry representatives were some of the main proponents of tax reform, aiming to reduce this disparity.
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