Since the beginning of 2023, some provisional measures (MPs) have been published on different topics, of which some involve legislative changes related to tax issues. What is surprising is that, although some of them bring positive changes to the country, they are not being approved.
Our view is that this happens because, unfortunately, all these changes require a very strong political game to be implemented. A good example of this is that of all of the MPs that were on the ballot and related to tax issues, only one was approved by the Senate: MP nº 1,152/2022 (on transfer pricing rules), which modifies the rules for setting prices used in transactions between related companies, in order to adapt national rules to those practiced by the Organization for Economic Cooperation and Development (OECD), as well as to avoid practices aimed at reducing the payment of taxes.
The reason? It seems to us that this approval only took place because the theme is not only linked to issues related to Brazil, but also undergoes external pressure – since there were differences between the transfer pricing system adopted in our country until then in relation to the OECD standard, thus limiting Brazil’s access to the organization.
On the other hand, MP No. 1,160/2023, which reestablished the casting vote as the sole tie-breaking criterion in the Administrative Council of Tax Appeals (Carf), expired on June 1, 2023. The maintenance of the current rule, favoring the taxpayer (in the event of a tie in the judgment vote, the result will be pro-taxpayer), clearly demonstrates that MP approvals depend on a political game.
Note that this issue is not final: the National Congress is still dealing with PL nº 2.834/2023, which was sent to the Chamber of Deputies in May of this year to return to the tie-breaking rule by the vote of the president of the class (who is always a representative of the tax). The project, which is being analyzed on an urgent basis, must be concluded by June 21: the deadline is also running out through this legislative route.
This insecurity directly affects taxpayers who are adrift while there is no conclusion on the subject. And, in the meantime, despite having the casting vote rule in their favor, their cases are not judged due to the auditors’ strike responsible for the judgement.
And now? Is it worth taking this discussion to court and claiming the immediate inclusion of the administrative processes in the Carf agenda in an attempt to have the case still judged under the rule of the casting vote in favor of the taxpayer? Unfortunately, considering all the comings and goings, taking the matter to the judiciary makes us believe that we are facing a vicious circle and that all paths lead to the same outcome: total insecurity.
What about MP No. 1,171/2023, which aims to change the taxation rules for investments abroad? What should we expect in this political scenario where nothing seems to have a beginning, middle or end? Although the MP is very well written with exceptional technical quality, it does not seem to be being appreciated and/or with a chance of approval.
In total, 106 amendments to the text have already been presented. There was a call for a meeting to set up a Joint Commission at the end of May, which was canceled on the same day. Again: we don’t even know which deputies and senators will be analyzing the matter, i.e., how can we expect any legal security in this country?
As we mentioned earlier in our newsletter, we believe that the tax reform and the legislative changes – if well structured – deserve our vote of confidence. Changes that make sense for Brazil, and not just those that suit one side or the other, should be appreciated and approved. The political game for the good of the country should be only one. This is the good faith we believe in.
