tax will “catch” Netflix and Uber – Brazil

The Minister of Economy, Paulo Guedes, said on Thursday (5) that a new tax along the lines of the CPMF should be created with the tax reform: this would serve to increase government revenue and reduce labor charges paid by companies. He mentions that this would be a way to “get” companies from the new economy as Netflix and Uber.

Paulo Guedes (José Cruz / Agência Brasil)

“How do I get Netflix, Uber? So I take it ”, said Guedes. With a tax on financial transactions, which would be paid by companies and consumers, “we can collect R $ 100 billion, R $ 150 billion and we can also create 5 million jobs by reducing the labor burden”.

The tax reform, which will be sent to Congress in the coming months, will have three pillars: an IVA (Value Added Tax) that will unify several federal and some state taxes; a review of the Income Tax structure; and a charge on transactions.

“We are also going to enter our news, that everyone is upset, but I ask, what is the alternative?”, Asked Guedes. “FHC created [a CPMF], collected so well. The priest paid, the dealer paid, because he had lunch there, charging. ”

For the minister, society will have to make a choice between two options: pay 20% of labor charges; or pay a lower rate, from “10% to 13%”, complemented by the new CPMF.

New CPMF will be charged to those who pay and those who receive

Despite the name, the former Provisional Contribution on Financial Transactions was applied between 1997 and 2007. The rate was 0.38% for a good part of that period, charged on all withdrawals and bank transfers; whoever made the payment paid the tax.

The government’s proposal is to recreate the CPMF so that both parties pay the tax: both who sends the money and who receives it. The economic team suggests an initial rate of 0.4%, charging 0.2% of those who pay and 0.2% of those who receive. The new tax, provisionally called CP (Contribution on Payments), could increase to 1% – 0.5% for each side of the transaction.

“We will leave this choice to society, to the political class. We are not going to invent anything. We are going to put this on the table and let everyone choose, ”said Guedes. The new CPMF will require a PEC (Proposed Amendment to the Constitution), which is more difficult to pass than a common bill: it will need the votes of 3/5 of deputies and 3/5 of senators.

With information: leaf, Reuters.

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