Still grows “Brazil Cost”
The legal discussion on the site of the Service Tax (ISS) collection on leasing operations dragged on for more than 13 years, during that time the negative repercussions on the leasing activity were emphasized. The comings and goings to court have brought great legal uncertainty, significantly inhibiting business. The market for leasing saw its share of the credit industry decline significantly.
During these 13 years, however, the sector has made important advances in the field, always based on the technical arguments presented in the defense of leasing, in which the following stand out: 1- the decision of the Superior Court of Justice (STJ), 2012, that the ISS would be collected at the headquarters of the leasing company, 2 - the decision of the Supreme Federal Court (STF) in 2014, concluding that the discussion on the active subject to collect ISS in leasing operations is an infraconstitutional matter, and 3 - the Transit in rem judicatam of Special Appeal 845766, on March 3 of this year, before the STF, ending countless lawsuits filed by hundreds of Brazilian municipalities in the eagerness of the collection fund.
In spite of the decisions confirming the understanding of the site of payment of the ISS in the leasing operations, on May 30, the National Congress overturned the vetoes of President Michel Temer to the provisions of Complementary Law 157/2016, which establishes rules of the Tax on Services, based on the fact that "the provisions contravene the logic of taxation of these services, which must occur in the place where analysis of registration, deferment and control of the financing granted, and not according to the domicile of the service taker". With the amendments incorporated in LC 157/2016, the ISS on leasing operations is the value of the tax (ISS) is due to the municipality declared as tax domicile of the legal or individual entity taker of the service (article 3, paragraph 3, of aforesaid LC).
The amendment will have a negative effect on the national economy, creating a significant operational obstacle in the contracting of leasing operations, once, which are the more than 5,570 Brazilian municipalities that have the competence to regulate the ISS, which will certainly inhibit many residents to enter into new leasing operations. In addition, leasing companies will be subject to tax rates of up to 5%, and this burden of the alleged increase of collection by the municipalities will be borne by the taxpayer. It should also be noted that, with such a significant tax burden, the leasing would suffer from a reduction of isonomy in relation to other financial operations, which has a tax wedge different from that of the ISS.
This will undoubtedly make leasing a loss of competitiveness, eliminating the possibility of access to credit modality that allows access to machinery, equipment, trucks and buses, destined for industrial production, which contributes for development and the long-sought growth of our economy.
The reality is set, with more Brazil cost. The reduction of the so-called "custo Brasil" (Brazil cost) has to continue to be pursued by every society, and undoubtedly, the paradigm lived by the leasing sector in Brazil, will only be broken when we have the much-desired Tax Reform. This reform should seek to simplify the process of tax collection and the end of the Fiscal War between federal entities, seeking the adequacy of the tax burden - today around 35% of GDP.
A Tax Reform in the search for the simplification and efficiency of the tax collection should pass through the extinction of ICMS and other taxes, such as ISS, IPI, Pis and Cofins. Brazil is one of the few countries in the world that does not adopt Value Added Tax (VAT), which is characterized by selectivity and non-cumulative taxation.
As long as the long-awaited Tax Reform is not done, great sectors of productive activity will continue to live with legal insecurity and its negative effects on our economy, lack of economic growth in the country and absence of employment generation for our society will be impacted.