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Brazil mulls staggering changes to social security, value-added taxes -Folha
March 6, 2017 / 1:31 PM / 7 months ago

Brazil mulls staggering changes to social security, value-added taxes -Folha

SAO PAULO, March 6 (Reuters) - Brazilian President Michel Temer plans to simplify the PIS and Cofins social security contributions and the ICMS value-added tax in a three-stage reform of the nation’s complex tax code, newspaper Folha de S.Paulo reported on Monday.

The plan would entail passage of two decrees and one resolution in the Senate, the report said. By staggering the effort, the government hopes to avoid problems with collecting tax revenues as it battles a hefty budget deficit, the newspaper said.

The social security levies are among the most lucrative for the federal government, which derives 4 percent of its revenue from the PIS and 16 percent from the Cofins, Folha reported. Under the current system, collecting the taxes is complex and expensive.

There are currently 30 different PIS levies. Under one scenario, the government could cut that to two, Folha reported.

The plan would be to alter rules for the PIS this month and the Cofins by June, according to the report.

In the second half of the year, the government would focus on the ICMS tax, sending a proposal to the Senate.

The government aims to reduce the levy to 4 percent nationally, Folha reported.

Most states in Brazil’s South and Southeast now charge it at 12 percent. Differences among states have led to accusations that some are driving down rates to attract businesses.

Media officers at the Finance Ministry were not immediately available. (Reporting by Ana Mano; Editing by Daniel Flynn and Lisa Von Ahn)

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