With the end of 2024 approaching, along with my deadline to prepare and submit this article, I am apprehensive to share my impressions on the year that is coming to an end, after all the madness that has taken over the tax world since December of last year and that has not given us any break this year.
The government made an effort: it ended federal tax benefits in tax subsidies; it changed the taxation of equity investment funds (FIPs); it went on a witch hunt in federal compensations; it eliminated the Social Security Contribution on Gross Revenue (CPRB); it made changes to the Emergency Program for the Recovery of the Services Sector (Perse); and it also changed the calculation and use of Interest on Equity (JCP).
In parallel to this, we had discussions and debates in the National Congress to draft complementary legislation to regulate the tax reform on consumption. It began with the enactment of Constitutional Amendment No. 132 at the end of 2023, with an initial focus on simplifying the system, replacing 5 taxes (ICMS/ISS/IPI/PIS/Cofins) with just 2 (IBS/CBS), which ended up developing into a complex system with the establishment of the additional selective tax, with the intention of changing the ITCMD, ITBI and IPVA, in addition to creating split payment, cashback and, of course, raising countless questions about how all of this could be simple and make life easier for citizens, taxpayers, business owners and, of course, the tax authorities themselves.
And that wasn’t all. In 2024, the Administrative Council of Tax Appeals (Carf) resumed its activities in full force and approved its new electronic judgment system, with modernization of oral arguments, raising doubts and questions about the importance of discussions and debates in sessions.
But the icing on the cake, as always, was in fact in the hands of the Higher Courts, where the Federal Supreme Court (STF) ruled on the possibility of filing a rescission action to review final and binding decisions that disagree with the ruling on the Thesis of the Century (Topic 69), but did not conclude the discussion on the taxation of one-third of vacation pay or the exclusion of ISS from the PIS/Cofins calculation bases. These are issues that still plague the business community without a definition. The Superior Court of Justice (STJ) made progress on tax issues, once again making history, not only by ending the limitation on taxation of the S System, but also by innovating in terms of modulation of effects and, of course, bringing even more legal uncertainty to the Brazilian tax system, which is anything but easy and simple!
Well, for now, as the lights begin to come on and the focus shifts to end-of-year festivities, attention is focused on the government’s recent announcement on tax adjustment. Despite expectations of significant changes to the minimum wage and the income tax table, on paper we still have no concrete measures in place.
The market is in turmoil, the dollar has reached its highest level in history (R$6.001) and the stock market has dropped significantly. And now, what can we expect from 2025?
For next year, we have the great promise of income tax reform. It remains to be seen whether there will be space and political will for this discussion in the National Congress. With one year to go until the new consumption tax begins in 2026, the government cannot take its eye off the budget and, to do so, it is not enough to focus solely on free, easy and loose tax collection. It is necessary to look inward, take care and rationalize expenses. It is necessary to reduce interest rates, look at and meet the fiscal target, and get the country back and running. Every Brazilian has learned at home that you cannot spend more than you earn. Will the government one day learn this lesson? There is still time. Only time will tell!
By Tatiana Del Giudice Cappa Chiaradia, partner at Candido Martins Advogados.